Jason Hartman starts the show by talking about New York City and the fact that the Hartman Risk Evaluator demonstrates there are no good rent-to-value ratios to be found in the area. Afterward, Jason welcomes William Poundstone. They talk about his latest book, Head in the Cloud: Why Knowing Things Still Matters When Facts are So Easy to Look Up. They also discuss why having a general knowledge of baseline facts and the Dunning-Kruger effect have humbling assets.
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Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the company LEED solution for real estate investors.
Jason Hartman 1:04
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Welcome to the creating wealth show. This is your host Jason Hartman with Epic So number 848 40, I am out in the field today coming to you from a place you would never want to invest in real estate. Well, if you did buy real estate here, you would not be an investor, you would be a gambler, you would be a speculator, you would be violating commandment number five. And you would be violating some of the other 10 commandments of successful investing as well. But what is commandment number five? It is, Thou shalt not gamble, Thou shalt not gamble. So forgive the sound quality for this short intro portion of the podcast. But I want to give you the sounds of the city as I walk outside here, onto my balcony here in my hotel room. Do you know where I am? Can you tell by the sounds of the city, one of the most populated cities in the world? Yes, I’m in the Big Apple, New York City. Okay, I’m going to walk back inside so you don’t have to hear That background noise. So yes, I am in the Big Apple, New York City where you can buy a $3 million condo, that’s 1100 square feet. Probably if you’re lucky, it’s 1100 square feet. You can buy a $3 million 1100 square foot condo, and that condo will rent for a whopping $11,000 per month. What is the rent to value ratio on that property? It’s pathetic. It’s terrible. It’s disgusting. You know, I would never say buy that property. Because your rent to value ratio is somewhere around the point three mark, isn’t it? It’s terrible. We want to get 1% or as close to it as we possibly can in good quality properties in good quality markets. And that’s what we do. We help people invest in the most historically proven asset class in the entire world. Understanding that as multi dimensional asset class. And remember the show I did several episodes ago where I talked a lot about one metric in investing. And it was what it was the crap rate. Yes, the crap rate, I mean the cap rate, pardon me the cap rate the cap rate, same difference, same thing. You know, it’s fair to ask when I brag about income property and I call it this multi dimensional asset class. Are there other asset classes that are multi dimensional? Well, sure, there are there are dividend paying stocks that have two dimensions, of course, capital appreciation, hopefully, hopefully you will have capital appreciation. And what is the other dimension? Well, its income, its cash flow. It’s the dividend that the stock pays, and that would be a two dimensional investment, but income property is multi dimensional. Well, we’ve all heard the various sayings about it over the years, right? We talked about how income property is ideal. Why? Because it has all of those great aspects of multi dimensional asset classes. Yes, it has income, it has depreciation, it has equity build up, EA L, I got appreciation, what am I missing here? leverage L is leverage, and then there’s no t in it, but it has tax benefits. It has incredible tax benefits, because taxes are the single largest expense in any of our lives. And income property is the most tax favored asset class in America. But it’s fair to ask, you know, what is the other asset class that really gets close to income property in its multi dimensional nature? Well, there really isn’t one that’s open to the average investor. But I’ll tell you, if you are in the world of high finance, if you are in the world of big business, there is a another asset class. And years ago I had this girlfriend Her name was Leslie and Leslie’s father was quite the wealthy guy. Well, I guess mother and father but um, maybe unfairly doing the father credit because he’s the one who ran the business and mom did not. But you know what they say, behind every great man is a great woman. Right? So, yeah, I think I will say her parents were extremely successful. Why were they so successful? Well, her father had a furniture business that did commercial office furniture. But what he really did was buy businesses. And I remember her telling me a long time ago before I had a real understanding of this, how he did an L be a leveraged buyout, a leveraged buyout of a company, another furniture company that he acquired for VA acquired I should say, and that can be very multi dimensional, right? Because you can do all kinds of creative. funny things. I say funny kind of half heartedly joking and not joking at the same time, usually ripping off the shareholders, but in the world of high finance and big business, leveraged buyouts, you know, you can do some very multi dimensional things. Remember, in the late 80s Well, I guess the 80s in general, but didn’t come to my awareness until the late 80s for sure. Where we heard about all these corporate raiders right? We heard about Carl Icahn, I mean, these guys are still around t Boone Pickens, Ivan Boesky, and then of course, the junk bond King Michael Milken, but he was a different kind of cat. He wasn’t in the same category as those other guys. And you know, these guys made fortunes because they were dealing with creative finance in something that if it was not multi dimensional, you know, maybe it was a two dimensional asset at the beginning capital appreciation income, but they turned it into a multi dimensional asset. Well, what was the the famous mantra of the corporate raiders? Well, I don’t know if it was a mantra, but it’s something they did. It’s right. It’s something that they were known for. What they would do is they would get control of a company. And then they would take the parts of the company, the components now in real estate and income property. This is where we go back to the Hartman, risk evaluator, the Hartman, risk evaluator, not familiar with that, go to Jason Hartman, calm and type Hartman, risk evaluator in the search bar, and learn about that because it is an amazing original discovery by yours truly. Jason Hartman. Yes, it took me 19 years to figure that one out. Here. You got it in just a short few minutes of listening to a podcast episode on that subject. So go search that and understand it because really, that’s what the corporate raiders were doing. They were basically taking control of a company. They realize that they components of the company like the real estate owned, the other assets that had were actually more valuable than the stock itself. That was an amazing opportunity for many of these people who made ungodly fortunes. And, you know, that’s what our clients were doing, essentially, when they were buying properties from us a few years ago. Now, they’re still doing it a little bit in a sense, because if you can buy properties at or very close to or hopefully lower than the cost of replacement or construction, as we talked about in the Hartmann risk evaluator, you are essentially being a corporate raider in a way because you are acquiring that property. And the parts the components the commodities, the glass, the steel, the lumber, the concrete, the energy, the petroleum products, the copper wire, all of the oil those components are worth more than you paid for the property. And guess what? Like corporate raiders, you also just accomplish what? My ex girlfriend’s father accomplished, right? You did an LBO, you did a leveraged buyout, right? Because with income property, we get as much leverage as we possibly can. And if we can’t get any leverage at the time, meaning we have to pay cash for the property. We’re going to do our LBO later, we’re going to postpone our LBO because eventually, we’re going to follow my refi till you die plan, and we’re going to refinance that property. We’re going to pull all cash out or as much of the cash as we can out of it. yet we’re still going to own and control the asset. Do you love income property or what? It is the most amazing asset class ever? You can do all these creative things in essence, just like a corporate raider in a way, and I don’t know why I got off on this corporate raider stuff, maybe it’s because I’m in New York City and the Big Apple and, you know, Wall Street is, is nearby Wall Street, the modern version of organized crime. And I was talking with one of my buddies who used to be in corporate finance, and he was an analyst here in New York had lunch with him today, you know, it’s hearing kind of the same stories of how, basically everyday he had to be the first one in the office to value the fund that invested in all these different assets. So maybe that’s why I’m thinking of it, I’m not sure. But this is the idea with a small asset class accessible to virtually every lower middle, middle, and certainly upper middle and wealthy person, middle class, lower middle class, upper middle class, middle class person, you have access to a similar type of creativity that the corporate raiders have today and had in the past. So it is truly the most historic proven asset class in the entire world income property income property. Well, without further ado, we’ve got to get on today because we’ve got a 10th episode show where we’re going to talk about something of general interest, something thought provoking something about life success in general, not income property specifically. And I just wanted to give you a little taste to whet your appetite today and keep you focused on the wonders of income property, our favorite asset class. But before we do that, of course, I want to remind you that in just a couple of weeks, we have our venture Alliance mastermind in Chicago. Our venture Alliance mastermind is coming up in Chicago. And I tell you, I’m super excited about this particular trip. We have confirmed Mitch Shedlock as one of our speakers. He is joining us for dinner with the venture Alliance on Friday evening. And then he is speaking to our group on Saturday morning. He’s staying at the same hotel where we’re all staying in Chicago. And so you’ll have some real time to pal around. pal around as Sarah Palin said, you know, Obama was paddling around with these communists and well, he kind of was Bill errors. We had him on the show a couple times. One of the guys Obama was palling around with a Sarah Palin used to say love that casual funny term. And yeah, Miss Shedlock, otherwise known as Mike Shedlock, or miss his nickname, am I sh Shedlock? He is really a very interesting investment advisor and economist in his own right. I’ve been following his work for Oh gosh, I don’t know 1215 years now maybe. And fascinating guy. He writes a fascinating blog. And he’s, he’s going to be speaking to us at the venture Alliance coming up in Chicago, so don’t miss that. It’s going to be fascinating. And the venture Alliance is working on some other great plans for the rest of this year. We’ll have two more trips this year. One will be a big trip. We’re thinking about going to Cuba, we can, you know, study the failure of communism, right. I’ve been to Cuba before I was there about 12 years ago. But I’d love to take a trip back to Cuba. Either that or we’re going to go to Hawaii. Yes, Hawaii, but the island of Hawaii specifically, and have a real nice peaceful retreat. Or maybe we will go to the Ice Hotel in Sweden, the Ice Hotel, the one that was in the James Bond movie, the one that they build every year and sculpt out of ice, and then it melts. Anyway, one of those trips for our big trip this year, and then we’ll do another small trip, we might do an adult summer camp, and we’re kind of thinking about our other trip as well. So that’s what’s on tabs for the venture Alliance. Get yourself around people that are doing big things, and your mind will expand and you will do bigger things automatically, just by just by virtue of association. That’s how it works with us humans. You know, we’re all kind of little sheep and followers in a way and we just got to get around people doing big things. That’s what a mastermind group is all about. And then of course, our Oklahoma City, Jason Hartman University live Jq live and property tour coming up in early July. You can check out both of these events at Jason hartman.com in the events section. And then also the venture Alliance has its own website at venture Alliance mastermind calm also, we have some educational products and I know some of you went to go buy them and we had a little problem with our payment gateway that is now fixed and that’s it. Hartman education comm so check that out as well. Hartman education comm anyway, without further ado, let’s get to our 10th episode guest today because it is a 10th Show Episode Number 840. And then we will be back on Friday with a handpicked by our new hand picker. By the way. We have someone who took over for me and that is Mr. Gary Pinkerton, our client and venture Alliance member that you’ve heard on the show before. He is handpicking flashback Friday episodes for us now. So thank you, Gary for doing that he is a better student of my work than I am. He and his wife both are Sue as well. So Gary and Sue will be picking our flashback Friday episodes. And that’ll be up Friday and then Monday we’ll be back with a regular brand new episode. So here’s our guest today as we talk about why all kinds of other aspects of our mind beyond facts really matter to us.
So let’s go to our 10th show guests. Here it is. It’s my pleasure to welcome William poundstone. He is the author of The New York Times best selling books fortunes formula, The Untold Story of scientific betting system that beat the casinos and Wall Street and priceless the myth of fair value and how to take advantage of it. Gaming the vote why election Art Fair, and what we can do about it, rock break scissors, a practical guide to out guessing and outwitting almost everybody in the new book head in the cloud, why knowing things still matters when facts are so easy to look up, William, welcome. How are you?
William Poundstone 17:18
Yes, I’m very good, good to be with. Good. It’s good to have you on the show.
Jason Hartman 17:21
You’ve got a fantastic body of work. And your latest work is head in the cloud. You know, we do we live in this information era, obviously. And we have lived in that for several decades now. But is there a difference between being able to look things up? And you know, what we actually know without looking it up? And then of course, there’s this, you know, the debate of what’s the difference between knowledge and wisdom? information isn’t everything. You’ve got to know how to use it, right. So kind of dive into that and tell us about the premise here.
William Poundstone 17:52
Yeah, well, that’s very definitely the sort of questions I began with here. It is so easy to look up any fact we kind of You know, take that for granted now. But it is an amazing thing. And it definitely does change our whole relationship to knowledge. I mean, educators are confronting that what things is it important to teach kids nowadays? And there are people who say, you know, we don’t have to teach people to memorize the capitals of countries. I mean, you should know the capital of France, but you shouldn’t necessarily have to know the capital of Colombia or something like that. So what I did is I kind of took a big data approach, I did a series of surveys where I really looked at what the american public actually knows in all sorts of fields from quantum physics to pop culture. And then and I looked at how that correlated with everything from behavior to political beliefs, to how much money you make, how happy you say you are, and looked at what types of knowledge really did seemed to to matter in the real world. So that’s really the jumping off point with this. And I found that there were a lot of interesting correlations. One of them was just that, knowing what you might call trivia knowledge. And I mean, you know, the kind of stuff you might see on Jeopardy are in Trivial Pursuit, just general knowledge of facts that don’t seem to matter a whole lot, like, you know, state capitals, or something like that. But actually, these do have a correlation with how much money people make. The people who know more facts tend to make more money. Now, this this isn’t unusual in itself, because you figure Well, they’re more educated and if you have a college degree, you’ll earn more money. But even when you factor that out, you still find that among people of a certain educational level, the ones who know more trivia facts tend to make more money. They tend to report themselves as healthier and happier So this implies that there is, you know, something we should really pay attention to there, that there are values to having facts in your head and not just out there in the cloud.
Jason Hartman 20:10
Well, what do we do with these facts? I mean, you know, is it just the ability to use them quickly? I mean, certainly, if you go on on Jeopardy, and I mean, that’s, that’s helpful, but we’re all connected all the time. I mean, tell us what matters or is it really because we create, maybe on the more scientific side new neuro pathways and just expands our brain? And that’s, you know, certainly why it’s important to know stuff because our, our brain, like any muscle gets stronger with us. So I suppose, right?
William Poundstone 20:44
Yeah, I mean, one of the analogies I talked about in the book is that you can make an argument that because we’ve got you know, Uber and segways, and all these different ways of getting around that you don’t have to to walk anymore, but obviously you do have to Do that just to get exercise. And similarly, your brain needs some exercise. Even if you can look up facts, it’s helpful to throughout your life to be learning new facts. But I suspect there’s an even better reason than that for it. And that knowing sort of a general knowledge of baseline facts, gives you sort of the gift of humility. It helps you to appreciate what you don’t know, which does a number of things. For one thing, it makes it easier for you to look up stuff on the internet, because unless you can come up with a good search term and have a sense of what it is you don’t know. It’s very hard to look up stuff on the internet. And another thing is is an amazing phenomenon I talked about in the book called The Dunning Kruger effect. Now this is named for to Cornell psychologists David Dunning and Justin Kruger who realized that that the people who are either very ignorant or very unskilled in something, tend to have an exaggerated notion of how good they are at that something I
Jason Hartman 22:11
couldn’t agree more. No at all is is kind of the person who doesn’t know.
William Poundstone 22:19
Dunning told me the overconfident airhead is some someone we’ve all met and often someone we work with. And he actually came across this by reading a story about like one of the world’s Dumbest Criminals. This guy was a bank robber he ran he robbed two Pittsburgh banks in broad daylight. He did not wear a mask and of course the the video cameras caught his face. He was very quickly arrested. But when the police arrested them, he was amazed because he said he had he had worn lemon juice on his face. And his reasoning was that he had read that, that wearing lemon juice. Lemon juice is used as is invisible. ink. So I figured if he put it on his face, he would be invisible to the cameras. So obviously, this guy did not appreciate how much he didn’t know, he thought he would be a good bank robber, but actually, he was totally incompetent at it. And that became like the crystallizing example for this Dunning Kruger effect. And of course, you see it all around us. And really the only thing you can do to avoid being in that position is to have a kind of baseline of contextual knowledge, know a little bit about everything. Because that’s a good way of getting some sense of what you don’t know. You know, Bill,
Jason Hartman 23:41
one of the areas that I think this Yeah, I’ve always thought that the intelligence is largely dictated and not just intelligence, but our ability to find information as you so appropriately mentioned about searching online, is dictated by our vocabulary. Because Because the larger vocabulary, the larger our ability to think, if we can’t, if we don’t have a word for something, it really makes it hard to understand. And I’ve always been kind of fascinated, although I’m not a linguist and I don’t know much about different languages, and I barely speak much Spanish. When I travel, I just always think it’s more important to learn about history and economics than it is to try and learn the language. You know, you’d never have time to do that. But you know, some languages don’t have words for things right, including English. But English is really one of the richest languages in the world, because it takes from so many other languages, of course, but many languages don’t have words to express certain scientific concepts. And those people speaking those languages are very handicapped, I would think I mean, this is kind of my own hypothesis here. So I may be totally wrong, but it’s just an idea I’ve always had.
William Poundstone 24:55
No, you’re absolutely right. And you do find a big connection between people’s vocab Larry and you know, various measures of how well they get on in the world. In fact, in ancient Greece, I think they had just a few words for colors. Like they didn’t have a word for green. And that completely changes how you you look at the world. I mean, obviously they they saw green leaves, but it wasn’t something that they could really put a color name to. So it really does affect how you think it’s it’s a pretty important thing. One of the more amusing things I found was not just vocabulary but but how you pronounce words. There are people who mispronounce fairly common words in business meetings like Nish. A lot of people say niche. And I did a survey where I asked people you know, how do you pronounce these words? It was multiple choice. And I found that there was a huge correlation between how good you were at pronouncing words And how much money you make
Jason Hartman 26:02
and don’t forget grammar, but that’s another subject that you know, if you if you want to sound like an idiot just have bad grammar and bad table manners won’t help you much either. So
William Poundstone 26:14
Both of those things yeah, yeah. And of course Facebook teaches everyone that their friends don’t know grammar. Oh,
Jason Hartman 26:19
my God. That’s that’s the understatement of the century. And they don’t know the difference between why oh, you apostrophe re and why Oh, you are? Or the different types of tubes? Or, you know, we could go on and on, but let’s, let’s not, but yeah, okay, so that’s all very interesting. You know, one of the beginning chapters in your book, when you talk about Dunning Kruger effect is the map of ignorance. I mean, take the United States, for example, are we in a dirt and country? There’s the sort of European snobbery that goes on in the world. Notice quite a bit. And I happen to have grown up in the US but was born in Europe have been back many times, and I think Europe is highly overrated. Actually I, you know, they’re the victim of socialism and political correctness, unfortunately. And it’s a terrible problem over there. It’s coming to the US, but not as bad yet. But you know, Europeans do know a lot more about world affairs, they do tend to be pretty interesting to talk to Americans, you know, kind of had it easy, and they’re in their own little world, largely. I mean, I think a lot of people would agree with that.
William Poundstone 27:23
Yeah, exactly. You know, how
Jason Hartman 27:25
do we stack up as a country? And when you look around the country, tell us about this map? If you would?
William Poundstone 27:30
Yeah. Well, what I did was ask people, the very common thing to find a given country on a map, and I did it with a series of surveys where each person had to find 10, you know, countries on a map. And then I collated all that data, and made a what they call a cartogram, which is one of those distorted maps like you give for like Electoral College results or something. But I distorted this map according to what percentage of the American population not find a given country on a map. So Americans are pretty good at finding you know, America and so you can see that but they are really lousy finding countries in Africa. So on this map, you know, Africa looks very distorted very large. But you’d be surprised to aside from a few countries in Europe like France, England, Germany, Americans are really are not good at finding Switzerland, Greece, Austria, you know, countries that really play a big role in history. Now, I when I first did this, I thought, okay, Americans are really stupid with maps. That’s, that’s established. But I did a British version of this book where I wrote a fair amount of new material and conducted surveys with the British public, and I found that the Britons were really just as bad with maps as we are. Now. They were better at finding European countries. But aside from that, they We’re just as bad as Americans. So I kind of suspect that this tends to be a global phenomenon that a lot of people just don’t get the idea of a map. They don’t have this visual, you know, intelligence, a sort of mental image of the of the world. And that makes it very hard to really understand, you know, how countries relate to the US and, and what’s going on in the world.
Jason Hartman 29:24
Right. And they kind of they kind of know, their own neighborhood, I guess, right, like the Americans know the states a little bit. Yeah. And the European, you know, the Brits know, the European countries, because, you know, you can take a weekend trip to another country in Europe. Kind of a really cool thing about it. But I will talk to us about how this interplays with elections a little bit, if you would, or if you have any thoughts on that, and political issues. And so, you know, the country seems so divided now and the tensions are certainly high. B any any thoughts there?
William Poundstone 29:55
Yeah, exactly. One of the surveys I asked was just for people to Name, how many of their elected officials that they could actually name by by name? And it’s a pretty simple question. You weren’t expected to know anything about that official just what is the name of your congressperson, your two senators, and I found that the median American could name just six of their elected officials. And when you consider that, you know, the president and vice president were two of those, that’s really not very many. And this is scary when you think about you know, okay, presidential elections get all this publicity. But if you go down the ballot a little I mean, so much of the business of government is done at the city and state level, and people are pretty much clueless on who the people are representing them. It suggests that when people fill out their ballots for those offices, that at most they’re they’re just basing it on a party affiliation. They don’t really know much about that, that particular candidate, what he or she is done with it. There’s been any scandals, you know why they should or shouldn’t be voting for that person. So it is kind of a frightening thought there how little people know, my favorite example. And this is the whole idea of voting for judges. Now judges judicial elections are usually non partisan. So you’ve got some names on the ballot, you don’t even have a party to to adjust who you’re going to vote for. And what they’ve found is that people tend to choose the judge with an American sounding name. If you have a good simple name, like Smith, or Jones or something, people try to vote for them, as opposed to someone with a more ethnic name. But I give some examples in the book where the judge with the foreign sounding name was actually very well, you know, qualified, and the American sounding guy was some sort of crook who got in just for that reason or was totally unqualified. So again, we like to think that voters may These informed decisions, but in so many cases, they really don’t. Right. But
Jason Hartman 32:04
in the judges thing, just to balance that argument out a little bit. It’s not just a matter of qualifications or intelligence. It’s a matter of partisanship. So the voter might think, and I don’t know what’s going through their head, but they might think something like, Well, you know, this judge is not gonna vote for the American way, or, yeah, well, if I ever have to go in front of that judge, they might be prejudice against me. There. There are other thoughts besides just strict qualification? Right. You know, the old saying, a good lawyer knows the law. And a great lawyer knows the judge. Yeah, yeah. So you know, it’s it’s a matter of maybe relating to that judge to some extent, right. Just wanted to throw out another another concept there a little bit. But yeah, that’s a good point. People don’t pay attention to judicial elections much at all. Do they?
William Poundstone 32:57
Yeah. Unless you’re an attorney yourself. mean, people just just don’t seem to care about
Jason Hartman 33:02
that. And very scarily in some jurisdictions, attorneys and law firms can donate to judges campaigns. And that doesn’t have to be disclosed in the case, where, you know, the judge should obviously be recusing themselves. But in places like Nevada, you know, they can just do whatever they want. It’s it’s really mind boggling. You have a chapter entitled, sex and absurdity about that one because of the title.
William Poundstone 33:31
Yeah. Why, again, it’s it’s amazing how little millennials and people in general know about sex education. And I asked, you know, a number of questions like How many times should an IUD be inserted, and an alarming fraction of the public thinks every time you have sex? So obviously, we are failing in some ways to get just basic information to our kids in this
Jason Hartman 33:59
video. Interesting, very interesting. Are people getting smarter?
William Poundstone 34:03
Well, that’s a good question. And I’m not even sure that my research can really answer it because obviously, all my surveys were done within a fairly narrow time range. I can say this, though. I mean, if you go back, Socrates complained that, that people were getting dumber the younger generation back in archaic Greece was was dumber than the older generation. So if that perception had been true, I mean, we have the IQ of a houseplant nowadays, and we’re a little better than that. So I think it’s just sort of natural in human nature. To think all these kids today, they don’t know all these things we were taught in school. So they have to be dumb. But I think the reality is that the culture is always changing. I mean, just in science and technology, there are so many things that that kids are being taught now that were not taught 20 years ago. It’s common to have coding classes in school now. And this was not common, you know, in there. Parents time. So you have to before saying that young people are just getting stupider and stupider, you have to realize that they are learning an awful lot of things that maybe older people never did learn.
Jason Hartman 35:12
Yeah, I would totally agree with that. You know that every generation always laments that the next generation following them, how’s it better? They’re so spoiled. They just don’t try as hard. They’re lazy. They’re too liberal. You know, this is a common refrain, right? We’ve, you know, we’ve always heard this. It’d be, you know, the world never moves toward the more conservative side, hardly ever, it always becomes more liberal, if you will. And I’m not saying that in a good or bad way. I’m just making the observation. And it’s not necessarily a political way either, but just, you know, liberal ideology about various things, and things made a lot of ways keep getting better. I mean, they’re not all better, but you know, yeah, it’s interesting. Anything you want to share more about health or I’d love to hear about scientific data. To I know that’s a different subject, but just on any of your other work as well, before you go
William Poundstone 36:04
well about the scientific betting thing that was that was quite a fun book to work on. It basically started because one of my professors at MIT was Claude Shannon, he wasn’t actually teaching much then. But he was this kind of legend there. And it was said that he had basically retired, I should explain, he was the founder of information theory, which is basically behind the internet and our whole digital age today. So he was this incredibly, you know, a real genius, one of the few most brilliant people of the 20th century. But he had basically retired from science and the story was that he had discovered this scientific betting and investing system. He had made all this money in the stock market. So he decided to just kind of retire from teaching and live his version of the ideal life, which seemed to consist of practicing the oboe, and build a Robots in his basement workshop. And it was said that he got all these dividend checks at his MIT office, but he couldn’t even be bothered to come in and cash them. So, this, this was an interesting story. So I decided to look into that. And it evolved into this book fortunes formula that talks about what’s known as the Kelley formula, which is basically this scientific betting system that you can use in all sorts of situations. It’s since become very, very popular with a lot of hedge funds. And it kind of ties into all sorts of things about the recent financial system, the various bubbles in the market and everything. So it was just fun telling this human story that really connected to and supply this wonderful background to so much of the financial news lately.
Jason Hartman 37:50
Very, very interesting. But it just begs the question, if you know the secret to beating the casinos or beating Wall Street, are you doing it and how’s it working? For you.
William Poundstone 38:02
Yeah, exactly. This is really a bet sizing system if you’ve got some sort of advantage and you have to get that informational advantage on your own, this tells you the optimal amount that you should be staking on each particular better investment in order to increase your wealth at the greatest possible capital growth rate. So it is a bit you know, wonky and detailed that way. But again, if you’re in a situation where you have that advantage, this is really how to maximize it.
Jason Hartman 38:35
Fantastic. Whoa, give out your website and tell people where they can find out more about you and your work.
William Poundstone 38:41
Yes, the website is William hyphen, poundstone. Calm, and you can look up my books on Amazon or pretty much anywhere else, including your brick and mortar bookstore.
Jason Hartman 38:51
Fantastic. William poundstone, thank you so much for joining us. Thank you.
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