Hey everyone, thank you for listening.
This is Morgan Howell from the Collaborative Fund and the author of the book The Psychology
of Money.
And we're back for another episode of this podcast.
I'm still making no promises in terms of how many of these episodes I'm going to do or
whether this podcast is going to survive.
But the response from the first episode was good enough that I figured I would come
back for another crack.
And I'll tell you a quick word about podcasts, a little disclosure here.
I am not that much of a podcast listener.
A little bit here and there mostly when I'm on airplanes, but the reason I am a writer
is because I am a reader.
I like to get my information from reading words in books and articles and Twitter and whatever
it might be.
And I think just like everyone else, I just kind of assume that other people are like
that.
Everybody naturally assumes that other people view the world through the lens that they
do and respond to the world the same way that they do.
So I've always just kind of assumed that writing is where people get their information from
reading.
And to some extent that's true, of course.
But I'll tell you one thing that really kind of sparked my interest in doing this podcast,
which is that the audio book version of the psychology of money outsells the physical
book.
And it's not even close.
Never in a million years would I have thought that that would be the case when I published
this book.
I just assumed everybody likes reading books and audio books were kind of like this obscure
thing.
I didn't really understand why anyone would want to do that.
But a lot of people do.
A lot of you listening, I probably like to listen to podcasts and audio books more than
you like to read words on paper.
So that's part of the reason why I'm doing this.
I've always assumed that people are readers, but I think the potential audience size for
a podcast is actually much larger than it is for things that you write.
So we'll see where this goes, but I'm still doing this.
It's a lot of fun to do this.
There are no sponsors for the show for me to disclose right now.
This episode is being brought to you by my wife who is trying to keep our kids quiet while
I do this recording.
But let me get right into it.
Today's episode has to do with a story that I came across about a year or two ago.
And I came across this story in a very old New York Times article that had a one-centred
description of the story that I'm about to tell you.
But when I read it, I went, oh, that sounds interesting.
I want to learn more about that.
And the more I dug into this little story and the more threads that you pull, the crazier
of the story becomes.
I think it's become one of my favorite stories and the story that I have learned the most
from in recent years.
And it's a story that actually has nothing to do with money, has nothing to do with finance.
But I think this will all come around to not only a very important financial takeaway,
but maybe one of the most important ones that I can think of and I think is most important
for using money to live a better, a better, happier life for all of us.
This story has to do with the lifestyles that all of us choose to live.
And mainly has to do with the people who we want to impress.
And the decisions that we make with our money that's going to put out a signal to the world
of who we are and who we want to be and what our values are, those kind of things.
I want to jump right into the story right now.
This story takes place back in 1968 and it happens in England.
The Sunday Times newspaper, one of the largest newspapers in England, was going through
a tough period back in the 1960s.
And somebody at the paper said, hey, you know what we should do to try to drum up some
public attention to try to drum up some public awareness?
We should host in around the world boat race.
And the race was this.
It was the first person who can sail around the world by themselves, a solo boat race
around the entire globe will win 5,000 pounds.
They called this a race, but that was a little bit of a misnomer because nobody in human
history had ever done this.
Nobody in history had ever sailed around the world in a sailboat by themselves.
It had never happened before.
But nine sailors signed up to do this race.
Only one of them finished the race.
It took them about 13 months to finish the race.
But there were two sailors in the race who did not finish, whose stories are, I think,
someone of the most interesting and fascinating I have ever come across.
And they have so many takeaways from these stories from these two gentlemen, these two
sailors who did not finish.
I'm going to tell you their stories right now.
The first sailor is a guy named Donald Crowhurst.
Now Donald Crowhurst, two really interesting things about him in this race.
One is that Donald Crowhurst had more or less been a failure at most of the things that
he had attempted in life.
He was a failed businessman.
He was kicked out of pilot school.
He was kicked out of the army.
And I think he kind of viewed this race as his last attempt at redemption.
His ability to show the world that he was somebody who was important and successful to try
to redeem himself for his previous failures.
The second thing that's so interesting about Donald Crowhurst is he was not that good
of a sailor.
He really didn't have that much of an idea of what he was doing.
Certainly not the kind of sailing abilities that would lead someone to believe that they
could be the first person in history to sail around the world by himself.
But nonetheless, Donald Crowhurst took off in October of 1968 in his voyage around the
world.
He built his own boat.
And if you're asking, wow, was he an expert at building boats?
The answer is no.
He really was not that either.
But lo and behold, he actually made it pretty far.
After about three months of sailing, he made it about halfway down the coast of Africa.
So from England halfway down the coast of Africa, he actually made it pretty far.
And then when he makes it this far, his boat springs a leak.
Of course, it's his little home made both that he has, not that surprising.
And it's not that bad of a leak.
He's not going to sink.
He can bail it out with a bucket, but he knows that if he continues sailing down through
the coast of Africa, down to the kind of the outer reaches of Antarctica into the Southern
Atlantic Ocean, he's screwed.
He knows that this leak is going to be catastrophic if he gets into the rough waters of the Southern
Atlantic.
So he knows now, as he's drifting off the coast of the middle of Africa, that he really
has two options.
He can turn around and go home, in which case he's going to face shame and humiliation
and probably bankruptcy for failing at yet another thing.
Or he can continue the race in which he is very likely going to die.
His boat's going to capsize once it hits the rough waters in the Southern Atlantic.
These are his two options.
He actually realizes that there is a third option, and that is outright fraud and deceit.
So Donald Groverst turns his boat around and he sails back into pretty much what is the
middle of the Atlantic Ocean, pretty much smack in between the United States and Europe,
just drifting in the middle of the Atlantic Ocean.
And he starts drifting in circles.
And he stays there drifting in circles, not for days or weeks, but for six months, drifting
aimlessly in circles in the middle of the Atlantic Ocean.
All the while he is doing this, he ascending fake radio communications back to England,
making it look like he is still on his way around the world.
So he radios back to England and says, oh, and passing, you know, the southern tip of
Africa, making my way around Australia and passing Fiji, giving these fake coordinates
to make it seem like he's on his way.
This is all part of his plan.
His plan was, and we know this from his diary entries, that his plan was to kill enough
time drifting in the middle of the Atlantic Ocean so that he could have plausibly sailed
around the world while he's sending these fake coordinates back.
And then after six or nine months or whatever, he would sail back to England with his dignity
intact.
And he would hope that nobody would realize that on his quote, unquote, round the world
voyage, he was actually just drifting in the middle of the Atlantic.
That is his plan.
After six months of doing this, he starts to head back to England.
His kind of plans up, he's been, he's killed six months of time by himself just drifting
to nowhere and he's heading back to England.
And he realizes as he's coming home, just about when he's almost to back to England, that
he's made a critical error.
And that is the other sailors in the race were taking so long to complete this journey.
And they were so far behind where everyone else thought they would be that Donald Groherst,
the fraud who has been lying about where he is in the race, is actually going to sail
into England and win this thing.
And he is going to be crowned the best sailor in the world.
And actually the first sailor in human history to complete the solo voyage.
You might think that that is an amazing thing that he would be overjoyed.
He actually realizes that this is a catastrophe.
Because if he is crowned the winner, he's going to get so much attention and press and publicity.
And people are going to dig into his sailing books and his logs and see how did this amateur
novice become the best sailor in the world.
And he thinks that they are going to uncover this fraud and deceit that he has been pulling
off.
So he realizes that at this point, that pretty much the gig is up.
He realizes that he's not going to finish this race.
If he comes home, he's going to be uncovered as a fraud.
And that is even worse than not finishing the race.
He writes in his diary during one of his periods, he says, quote, I have no need to prolong
the game.
It has been a good game that must be ended.
It is the end of my game.
The truth has been revealed.
Just after that, he wrote another entry in his diary.
It says, quote, it is finished.
It is finished.
It is the mercy.
Kind of read into whatever that might mean, but you can understand his fate.
This is a state of mind during this period.
After he writes that diary entry, there were all timestamps.
He sends his last fake radio coordinates back to England, and he turns his radio off.
Ten days later, Donald Crowherd's boat was found adrift in the Atlantic.
Some other boaters found it and they said, that's interesting.
This boat is just drifting aimlessly.
Let's go check it out.
They approached the boat.
Donald Crowherd's boat.
And there was no sign of damage.
There was no sign of an accident.
And there was no sign of Donald Crowherd's.
And he was never seen ever again.
Nobody will ever know what his last moments were like, but if you piece all of this together,
it is almost certain.
Really, the only plausible explanation is that Donald Crowherd threw himself into the
sea and took his own life.
And that was the end of Donald Crowherd's.
Now, as this is all happening during this race, there is another sailor named Bernard
Wortessier.
He was a French sailor.
And Berber Wortessier really was one of the best sailors in the world.
And after six months of sailing, he was on track to legitimately win this race.
He's heading back to England and he's going to be the winner.
He's going to be crowned the best sailor in the world in the sole legitimate.
He's not faking this.
He really was on his way around the world for the first time in history.
And that too, you might think would be an amazing thing.
And he would be overjoyed.
And thinking this is like the tip of the head, this is the biased accomplishment for a
sailor like himself.
But after six months at sea, and on his way back to win this, Bernard Wortessier actually
starts getting very depressed at what is about to happen.
And I think if you really dig into his story, Bernard Wortessier was just a sailor's sailor.
He just loved being at sea by himself with the wind through his hair and the salt spraying
in his face.
He just loved the art of sailing and he was kind of disgusted by the commercialization
of sailing and sailing in a race where you were trying to perform for somebody else.
That idea just kind of made him sick.
That this guy who was just sailing for the love of sailing was actually now in this situation,
sailing for the benefit and the entertainment of the sponsors and the newspapers back
at home.
And this bothered him so much.
He writes in his diary during this period when he realizes he's about to win the race.
He says, quote, I really feel sick at the thought of getting back to Europe, back to the
snake pit.
I am really fed up with the false gods always lying in wait, spider like eating our liver,
sucking our marrow at charts that the modern world, that's the monster trampling the soul
of men.
End quote.
So not a lot of nuance in how he feels at this point and how he feels about going back
to Europe.
He's disgusted with the attention and the ticker tape parades that are going to await
him back at home.
This bothers him so much that one day in the spring of 1968, he is sailing back to Europe
and he comes very close to a commercial ship and he waves them down kind of gets their
attention and says, Hey, come over here.
I want to say something to you.
The ship kind of pulls right up next to Bernard Moitessey's boat and Bernard Moitessey
starts writing a letter.
He's writing a letter to the editor of the Sunday Times who was hosting this race.
He puts the letter into a Jerry can, a gas can and he throws it on to the deck of this
approaching ship that's next to him and he yells out for them to take it back to the
French consulate, which is what they do.
That letter that Bernard Moitessey wrote to the editor of the Sunday Times newspaper
says quote, dear Robert, today is March 18th.
I am continuing nonstop towards the Pacific Islands because I am happy at sea and perhaps
to save my soul.
After he writes this letter, Bernard Moitessey turns his boat around and he sails nonstop
to Tahiti.
He eventually lands into Tahiti and I kid you not, this sounds like a fairy tale, but
this is actually what happened.
He builds his own house on the beach, he grows his own food, he marries one of the locals
that he meets, that he meets there.
He has a child and he writes a book about sailing and he more or less I think lives happily
ever after.
He writes in the book about that he's writing about sailing.
He writes quote, to have the time, to have the choice, not knowing what, where you are
heading or what you are doing and just going there anywhere without a care, without asking
any more questions.
He says quote, you can't understand how happy I am.
So he, this guy who's actually about to win the race, quits the race, goes to Tahiti and
lives happily ever after.
Those are the two most interesting I think guys in this sailing endeavor, the two people
who didn't finish the race.
And you might be asking what does any of this have to do with money or the lifestyles
that we live and I actually think it's quite a bit.
It's this.
Donald Crovers was addicted to the attention and the admiration and the applause of other
people.
He lived his entire life just trying to get the attention of other people and I was just
purpose for this race was to try to prove to other people that he was worthy, who he was
worth it and he was worthy.
Bernard Wattessier was almost the exact opposite.
He was disgusted by the attention and the applause that we're going to be given to him by other
people.
He just liked doing things that made him happy and the idea of doing something for another
person was disgusting to him so much so that he quit this race and forfeited being the
first person to sail around the world.
And I think what's interesting about this is of course the what these two guys did are
like the most extreme examples of the decisions that you can make and by the way both of them
if you dig into their diaries had signs of what I think is probably mental illness,
which by the way was anyone else would if they spent six to nine months alone at sea
by themselves.
Let's not get too far into like the actual decisions that they made but the idea of
living a life for the attention and the applause of other people versus living a life doing
things that just make you individually happy without caring at all what other people think.
That is I think a pretty important point to drill home here and it applies to everybody
and the decisions that we make with our money.
Virtually every decision that you make with your money comes down to this decision of are
you doing this to impress other people and for the applause of other people or are you
doing this because it actually makes you happy.
And look I think this is not black and white because there are people in my life who I
really want to impress and I want to be proud of me but it's a small group.
It's my wife and my kids and my parents and like two or three friends I'm not going to
name you but that's who's love I actually care about.
There's this great quote from Warren Buffett when he was once asked what is the definition
of success and of course this is a guy who is worth a hundred billion dollars and he's
admired by millions of people and he says success is when the people who you want to love
you do love you and I think that's a really important point here and we look at someone
like Donald Crowhurst who was trying to impress people who didn't love him who weren't
probably not even paying attention to them.
That's pretty important.
Last summer I had dinner with a financial advisor and he told me this incredible story.
He said he has a client who every year the financial advisor sits down with him and he says
okay Mr. Client here's how our funds performed over the last year we outperformed the S&P 500
by this amount blah blah blah.
The client waves them off and says stop stop I don't care about any of that.
I don't care about our performance relative to other people.
He says all I want to know is do I have enough money to travel to Europe this year and if
the answer is yes I've achieved everything that I want to achieve and I could care less
about what other people are doing and how I stack up relative to them.
He said let other people compete against each other and play that game.
He says I just like going to Europe and I love that just the idea of the internal versus
the external scorecard and benchmark that there's two ways to kind of judge up how you're
doing. One is relative to other people.
Another is just whether or not you are happy and whether it's working out for you.
What I do here that's really important.
It sounds kind of harsh but I think this is very true and very important.
Is the idea that when you are trying to figure out ways of spending your money for either
for the attention of other people or because it makes you happy is the idea that most people
are not thinking about you or paying attention to you as much as you think.
Maybe the only somewhat unique and original idea in the psychology of money everything
else that I've already been written about before.
Maybe the only unique idea in there and maybe this isn't even unique.
It's just phrased differently.
It's what I call the man in the car paradox which is back when I was in college I was a
valet at a hotel and people would be.
It was a very nice hotel in Los Angeles and people would drive in in Ferraris and Lamborghini's
and Rolls-Royce's and I was you know us 20 years old at the time and I would sit there
and gawk and stare and I was impressed but I realized one day something that was really
important which has been with somebody would drive in in a Ferrari.
Never once.
Never once would I look at the driver and say wow that guy is cool.
Never did I pay attention to the driver.
What I did is I imagined myself as the driver and I thought to myself if I was the driver
people would think I'm cool.
And one day it was like do you see the irony here I'm never thinking about the driver
but I want to be the driver because I then assume that people will think about me.
And the truth is that is just nobody is thinking about you as much as you are they're thinking
about themselves and nobody is paying attention to your stuff as much as you are they're
paying attention to their own stuff and even when they like you are nice car your nice
house by and large they're not impressed with you they imagine themselves having it and
they think that other people will be impressed with them.
That's what I call the man in the car paradox it's all related to this in terms of are
you doing this to impress other people who are even paying attention to you or you doing
this because it actually makes you yourself happy.
I heard someone mention this phrase in the other day that I really like they said and
I forget who said this so I apologize and I'm not giving them credit but they said a
sweet at the high it is much nicer than a basic room at the four seasons like the high
tier room at the mid level hotel is better than the low tier room at the nice hotel.
I think it's the same thing for cars like a high end Toyota is a much nicer car than
a low end BMW.
I think it's not even close either and the reason why both of the things are the case is
that the sweet at the high it gives things that are actually make you happy more space a
better room a big living room with a nice couch the things that actually it's the internal
benchmark it actually makes you happy with the entry level room at the four seasons gives
you the only thing it gives you is the ability to tell other people I'm staying at the four
seasons it's all external benchmark even though the room itself is pretty basic and
doesn't have a lot of frills frills.
At the same thing with cars the high end Toyota is going to have nice seats better suspension
all the gizmos inside that are actually make the driving experience better whereas the
entry level BMW no offense to either of these cars or hotels they're all nice cars with
the entry level BMW gives you is the ability to tell people and show people I have a BMW
it's all external benchmark and I think look everybody is different to each their own
I'm not saying go out and buy the Toyota and stay at the high it the high it's a fine
hotel by the way it's just this idea that we go through our lives I think most of us
aspire to be something like Bernard Moittessier we aspire to do things with our money that just
makes us happy but I think if we're honest most of us live a life that is closer to Donald
Crowhurst where we're making decisions with our money and doing things with our money
that are for by and large the attention and the applause and the approval of other people
other people who are by and large not even paying that much attention to you and doing
things with your money that just make you happy rather than signal to other people like
it's hard to imagine a more important topic than that in money and to me one of the most
important things that you can use your money for that is all internal benchmark is using
your money for independence and autonomy and freedom and just waking up every day and
being able to say I can do whatever I want today you're using your money to give yourself
financial independence not to buy things that are going to impress other people people
who aren't paying attention to you it's just things that make you happy Bernard Moittessier
was completely independent completely independent of the applause and attention of other people
he to said I want to go live into heady I want to be a gentleman sailor and that's what
he did and I think that there's something so sweet about that and there's something so admirable
about that even if he's the most extreme example of that of just being able to live your
life on your own terms regardless of what other people outside of your close family and friends
think of it I think there's something so amazing about that one other point here that's
really important is this idea of playing your own game that when you realize that everyone
is just kind of living in their own world selfishly of like thinking about themselves thinking
about their own stuff their own cars their own homes and not paying that much attention
to other people you realize that everyone's kind of playing their own game and there are
lots of different games to play and I think it's so important with money to identify the
game that you are playing and stick to the rules of those of a stick to the rules of that
game because what a lot of people do in life with money when they're spending money and
saving money and investing money is they look to other people and they're not necessarily
paying attention to that but what game is that person playing like how do I keep up with
that person how do I like that setting the standard of what I have to keep up with
and realize that people play different games they have different aspirations different goals
different risk tolerances it's really dangerous to take your cues from somebody who's playing
a different game than you are maybe somebody is a day trader and you are a long-term investor
really dangerous in that situation to take your cues from them so it's so important to
identify the game that you are playing and only play that game not somebody else's that's
a big part of understanding the internal versus the external benchmark doing things for
other people versus doing things that actually make you happy that's all I got for this
episode but thank you for listening there probably will be more episodes I just don't
know when they're going to come or how many I will do but thank you so much for being
an early part of this I also might bring on some guests to have a conversation with to
try to mix it up but thank you again for listening I really appreciate it.
