Full Transcript

Dr James: 0:41

Welcome back everyone to another episode of Dentists Who Invest official podcast, a very, very, very special episode. Every episode is special, but this one especially so the chat we’re interviewing today. I’m sure you’ve heard of them a little. No one book written a while ago called how to Own the World, a book that has inspired many of us to begin our journey into finance and begin learning. It’s a book that’s written in such a simple fashion yet it contains so much complex information. It’s an amazing gateway to learning about the world of finance and it was certainly the gateway book for me that got me into finance and I’m sat opposite someone just now via Zoom that when I started the podcast I thought to myself wouldn’t it be wonderful if we could get this guy on someday? Wouldn’t it be wonderful if we could get the chat? We wrote this book on someday and now I’m sat here and today is that day. I’m pinching myself a little bit. Andrew Craig, welcome to the show, andrew.

Andrew: 1:43

Thank you very much. Goodness me, that’s a tough act to follow. I’ve obviously become aware of your group in the last few months and we’re delighted to. I’m in it and I’ve observed the fantastic work you’re doing, so I’m super honoured to be here. Likewise, and you could have had me on two years ago, buddy, don’t you worry about that.

Dr James: 2:04

No, I’m chuffed honestly and, believe it or not, the podcast started about eight months ago and it kind of went. And what? Actually? I think the group started about eight months ago and then the podcast came it. It spawned the podcast and maybe the group. The podcast has maybe only been around about six months, but no, it’s an absolute privilege. Andrew, I’m not sure. Maybe you get this all the time, but I’m unsure. You know just how many people you did inspire in that group. And when someone asks me, what, how do I begin learning and where do I start, I almost always recommend your book because it’s written in a way that it presumes no prior knowledge and it’s a plain English guide. It’s a plain English guide and maybe there’s been other books that have been released that explain it from the bottom up, but it’s the fact that it’s a UK based one as well. I don’t know if there’s many other like that.

Andrew: 2:59

Yeah, well, it’s one of the. It struck me years ago as a sort of angry young man when, basically, I was a stopbroker, I was living in New York and I was and I just I think it was on holiday in Miami and this would be November 07. I was on holiday in Miami and I met this fantastic, really cool Swedish couple with my then girlfriend in a bar in Miami and you know, as you do, when you’re out and you’re having drinks and you’re, what do you do? What do you do? All that nonsense, you know. And I suddenly had this sort of out of body experience. I thought this is like the I don’t know 50th or even 100th person I’ve spoken to. He’s kind of my age and stage. He was a really successful photographer, very cool guy, and he was very highly paid and he said all I have is cash and property, because I just don’t understand shares or bonds or I mean, forget about commodities. And this was obviously it wasn’t quite pre-crypto, it was pre-crypto actually 07, I guess. But and I just thought this is insane because not only are sort of highly paid photographers or you know people in other industries saying this to me, but people in investment banking are saying this to me right, some of my colleagues who are in their late 20s or early 30s have never bought a share and they go to work every day to be to work in investment banking, but they actually have never sort of taken a step back and gone. You know, if you’re British, what is a nicer or what big picture, what’s the stock market all about? And so I just, I think, on a very hung over morning in Miami over Bruns, I thought I’m going to write a book about this. You know, I’m going to start a business that basically tells people about this stuff from a bottom, exactly like you say, from a bottom up nuts and bolts way, and that that was kind of the genesis of originally started a long time ago.

Dr James: 4:32

Yeah, amazing. Yeah, I mean my personal anecdote or story. I had even less than property at one point. I just had cash and to me it was just about having the biggest number in my bank account that I could, and then I would save up and buy a house and I never really thought about anything beyond that. And I knew inflation was the thing, but I thought it was nominal, I thought it was one or two percent and I thought, if I just earn enough, if I just brute force my way to earning enough money, I’ll be all right. And it really demystified the whole realm of money, of finance, of, and it revealed to me why it’s actually not a very clever way to think to keep all your money in cash and there’s some really powerful lessons in there. The thing about inflation actually being 7%, that’s just mind blowing. You know, I mean 7% of your money. We all know how effective compounding is. Imagine the opposite of compounding but happening to your money every single year. That was the nicest way that someone’s to simply explained it to me once.

Andrew: 5:36

Inflation. I mean, inflation is also very personal, right, because it depends on what you’re buying. But you know, whenever somebody tells me inflation is low, I ask them to then explain to me why most stock markets in the world are. Or why does everything run from bottom left to top right, right? yeah, yeah property in London. You know leads, I’m sure, is similar right, but you know Singapore, zurich, stockholm, new York, boston, every single major city or Melbourne, sydney, they’re all basically all-time highs, and so are stock markets and obviously Bitcoin, which I know we’re going to come on to, is telling us an inflation story. And then you know, yes, the way that government statistical agencies calculate such things. So the BLS in the States Bureau of Labor Statistics and the ONS in the UK leaves a lot to be desired and it sounds a very conspiracy theory s to say that inflation is 7%, because actually we all know that. You know iPhones and computers and there are t-shirts and you know lots of products have got cheaper, but actually the most important products, I would contend, for most people’s monthly, what you actually need to live on, so health care, insurance, food, all this sort of stuff you know, and, and most pertinent, the property, because that ultimately is the biggest expense for all of us. It has only done one thing in the last 20 years how can inflation be one or two percent?

Dr James: 6:53

and you know, as you point out, that’s obviously a case I make in the book, but it’s a nuanced well, yeah, you’re quite right, if you zoom, if you have any long-term stable asset, if you just zoom out far enough, you’ll see just what you were saying. There the price only seems to increase. And yeah, it just. It makes you think when you, when you learn that, doesn’t it really very?

Andrew: 7:14

important to understand the difference between nominal and real. So the point being is the difference between what I mean. If we agree that everything goes from bottom left to top right. If you zoom out long enough, exactly as you just said, which is correct, I mean it’s in say, I’ve seen over a thousand companies in my career and every single one of them shows a chart which goes bottom left to top right. Now, to be fair, it’s, I work in smaller companies which find it easier to do that than a massive company that might have backwards years, but you know how much of that is monetary inflation. So the fact that the money, the currency units, whether they’re dollars or pounds or whatever they might be, is depreciating value versus the real growth of you know the fact that Apple are selling out many hundred millions of these now, and that’s real growth. Right so, but it’s one of the one of the key failures of our education system when it comes to thinking about all things financial is that most people don’t stop for a minute to think about the difference between nominal and real growth, and that’s obviously. That’s a key theme of the book.

Dr James: 8:12

Again not to go off on too much of a tangent about conspiracy theories, but it makes you wonder why it’s not taught in schools as well. I wonder why. I wonder why such useful information well, it is.

Andrew: 8:22

I mean it is, it’s a national. I tend to think with such things that it’s it’s through incompetence and inertia, and you know the Rothschild family put being puppet masters in the back and I think that’s true of an awful lot of things. So whenever I see people on Facebook rail against they or them, you know they want us to they it’s just nonsense, because they’re just. You know you can’t get a FTSE 100 board to agree on a strategy, right? So how are you going to get the Rothschilds or royal families of Europe or you know, these evil bankers in New York? How are they going to coordinate across 20 time zones and and and, thousands and thousands? I mean we talk about Davos and you know the, the Bilderberg group and all these sorts of people that people think are controlling the world, but actually I think it’s a much more sort of it’s much more chaotic. Yeah, it is chaotic but you know why is? You know it’s very hard for, for example, school teachers to impart the sort of knowledge from I keep pointing up here because what? Three versions of my book are up there and I’ll get them out in a moment to show you how rubbish it was when we did the first professional version, the third edition. But you know it’s very hard for school teachers in even in let alone in army schools, but in secondary schools and even university most of my economics lecturers, in all seriousness, at a good red brick university when I studied economics they had no nuts and bolts grasp of of shares or. But seriously they’re teaching you about really esoteric academic stuff production possibility frontiers and demand curves and supply curves and econometrics and stuff. Very, very few of the faculty at Birmingham University who were teaching economics truly would were investing in shares or could tell you anything practical about pensions or ices or, as it was back then, pep. So they’re used to be cool. But so you know, so you know and that’s the insight I guess that made me this angry young man who wanted to quit my job and write this book and set up his website called plainenglishfinancecom. You know it does. What it says on the tin was that. You know, it’s one of those weird blind spots in in society where this incredibly important information which is, if there’s any, there are a couple of things in life that are most likely to be truly life-changing, right, one is health and fitness, you know, like eating, well, going to the gym, running, that will be life-changing, because your life will be better if you’re a healthy and fit and you don’t get cancer or whatever because you are. And the other one is finance, because it makes everything so much easier, it makes everything else so much easier and sadly, both of those things are incredibly taught, incredibly poorly taught, in in schools and I would contact, I would contend, in universities, you know.

Dr James: 10:59

I think going through the, the treadmill of academia, does shatter. Maybe it maybe demystifies the illusion that everyone is incredibly competent, because at dental school okay, some of the stuff we were taught is just stuff that they haven’t done in in actual dentistry since the 80s and things that have been disproven a long time ago. Yet that is on the syllabus at some dental schools.

Andrew: 11:22

I had this the other day, so I think I think I’m right. So I’m not sure what the situation is in Britain anymore you might know better than I but certainly in the States I believe it is still possible to become qualified as an MD, as a fully fledged medical doctor, in America without studying nutrition at any point in your which to me, I mean nutrition is that’s the fundamental building blocks of our organism, right? We all know that our cells replace themselves every few months and if you’re eating good stuff, the result will be incredibly different in terms of cancer and dementia and everything. And I’m not talking about crazy fat, I mean no matter. Misinformation about food is just insane. But you can. You can become a qualified doctor in America and help. You know, try and help sick patients without actually thinking about what the patient’s putting in their mouth.

Dr James: 12:10

I mean, that’s that. I mean, maybe we’re getting into a deeper commentary of just what, what American views in general there with regards to diet. It’s hard to say, but yeah, that is quite stunning, even just the basics, you know what I mean, because how many, how many conditions and diseases have an element or a component of diet, and they’re pretty much all of them. But we, we digress. But that is very interesting. I didn’t know that.

Andrew: 12:39

Actually, the first thing is it’s an analogy for finance, right totally a mysterious thing that we’ve gone off down a tangent. Thanks to me. Sorry about that, but the same is true in finance. You know, as I said to you earlier, one of the most eye-opening things for me was working for a major. I started my career with Swiss Bank, sbc, in the late 90s and you know, looking around at all these incredibly smart like Oxford, cambridge, harvard, yale, you know my peers who were all extremely good at a very narrow if they’re a credit derivative sales person or trader, or an equity trader, or they’re a corporate financier working with big companies to try and optimize their balance sheet structure. You know, how much debt should we raise? Which currency should we act in? Should we acquire this business? You know, you’re a big oil company. Should we acquire this oil company in Venezuela? Blah, blah, all this sort of stuff. But what they actually didn’t do at all maybe because they were working 18 hours a day and all weekend, bother right, which is the sad reality for you know, 25 year old investment bankers is they never. You know, you never bear with them. And I did a slightly different role which happily was slightly less demanding, you know, which we can perhaps come on to, but but you know, and I had this enormous interest in reading, which I think is the you know, it’s the bibliography of my book is the one thing that, if you ask me how was I able to write it, it’s all about the 300 plus books that I was lucky enough to have the time to read and and many of my smartest peers and colleagues were absolutely brilliant at their role, but they had no big picture. They never took a step back and thought, okay, what is the stock market? What is the bond market? What am I actually doing? What you know, down here it’s for a company and they therefore, and also like like so many other people and we know, I mean, this is more obvious in other walks of life but they sort of don’t think about investment until they wake up one day and their 40s and go you know, I better figure out my pension, or an awful lot of them don’t which means you’ve lost 20 years of compounding, which is tragic. It makes you even as a highly paid investment banker. You, I mean and I was going to say this earlier, but we moved on but the the main insight about investment is that investment should reasonably soon in your life, if you start earlier now start contributing about as much as what you earn in your job contributes to your finance for your financial situation. And that is a secret that’s understood by every rich person in history but is not taught. People don’t think that we all know what a pension is. What is a pension? A pension is to get to a point in your life where you can live on your capital and the income that comes from your capital, rather than on the income that you have to career working. And what is a rich person? A rich person is somebody that doesn’t have to work because they’ve got money coming in from other assets or, you know, in the old days, because they inherited it from mum and dad. But increasingly nowadays we’re a much more egalitarian world from your own efforts. But do not teach teenagers and people in their early 20s about that reality that it’s actually eminently possible to achieve that and you might. You might achieve it by 45, you might achieve by 55. Most people seek to achieve it by 65 or 60 when they retire and sadly, very, very few people do, which is another another theme I covered in the book. You know that one of the biggest problems with our pension system is even with that pension system. Most people are confronting an old age lived in real poverty because they’re not taking any steps until they’re too old. I don’t like this freeform discussion, but I’ll try. I’ll try and be quiet now and let you go back to the structure that you wanted to inject.

Dr James: 16:02

No, this is brilliant. I’m more than happy. I’m more than happy with this. Um, I was just going to add to that by saying that I, I was one of those people you know before. I picked up your book not that long ago and I just thought investing was the, the, the world. I just thought it was boring, you know, I just thought I didn’t really think it mattered to me and I thought maybe I’d start thinking about it when I was 30 and 40 and I had, you know, a wife and 2.5 kids, or 2.2 kids, whatever the national average is and maybe, yeah, I’m really glad that I did start learning, because I would have that. You’ve almost, you haven’t. You haven’t. You haven’t missed the boat. You’ve never missed the boat. It’s never too late to start, of course, but the sooner the better. Of course, because of the power of compound and we were talking about your book a minute ago I just wanted to know a little bit more about your, your journey to creating the book and then how life changed for you afterwards, because surely that book, you you kind of expected it to blow up as much as it did.

Andrew: 17:02

No, well, that’s very true. But before, just to go to a point, just before we come on to that, of course, yeah, of course. So what comes across as quite a right wing kind of evil capitalist investment banker point to make but it comes from what you just said is the other thing about finance that is really fallacious and really annoys me is this idea that it’s for the rich, like the stock market is something for the rich, you know, investment, come up whatever, gold, whatever, that’s something for rich people, right. And that gets the causality of the relationship between rich people and the stock market the wrong way around, 180 degrees. The wrong way around, right? It’s not that rich people are interested in the stock market and it’s something for rich people. It’s that if you become interested in the stock market, you have a much, much higher probability.

Dr James: 17:44

I see, yeah, chicken and the egg and that’s true.

Andrew: 17:47

That’s true for 200 years, right, and and it’s a tragedy that this you know, there’s a very especially in Britain, which has a very kind of you know, eat the rich, like you know, because we come from this sort of aristocratic culture where the rich were horrendously bad, bad actors for hundreds of years when they just enclosed all the land and the only place in the world that was worse than Britain in that respect was kind of Russia and and France before they started chopping the heads off aristocrats, right, but you know, incredibly unequal society where aristocrats used to live like they, like we see in Downton Abbey and the rest of the world went yes sir, no sir, and so there’s a deeply ingrained sort of cynicism about such things. But the world has completely changed and you know there’s a brilliant book called the Millionaire Next Door which explains that. You know, a very significant percentage of millionaires in America are people from ordinary backgrounds and normal walks of life who’ve just learned this stuff young and because maybe they had a, you know, a parent that was like. You know, robert Kiyosaki’s rich dad, poor dad, makes a similar point and it’s like, rather than railing against the sort of politics of envy and jealousy. Oh, bloody rich people there, you know, stop margots for them. No, no, no. Roll up your sleeve, get to know about equities and finance and compounding and all this stuff that obviously I talk about in the book, and and and then your probability of a good now. Look, you can’t do it in three years. But but you know, most rich people are also old people, because that’s just. Warren Buffett made 94 percent, or even 99 percent, I can’t remember the stat, but it’s like 90 percent of Warren Buffett’s wealth was created after his 60th birthday. Right now, we’d all like to be wealthy young enough so that we can enjoy it, right, but you know it’s. I’d still contend that you know a lot of millennials. Look at, I’m 45, right, and I’m an old man, you know, basically, but I don’t feel like an old man and I tell you what 20 years has gone past incredibly quickly. So you know, if you start, if you sort of think about your future. So one of the other things psychologists say about finance is the problem with saving money today to to make sure your future self is wealthy, right, is that? Your future self to you, psychologically, is as much a stranger as some random person walking past on the street that is so interesting.

Dr James: 19:57

I’m never thought of that.

Andrew: 19:58

That’s really true if you say to somebody who’s just moved, you know, just left university and they’ve got their first job and the money is really tight, and you say to them, look just fine, 25 quid a month or 100 quid a month or whatever, even if you work in a bar, trust me, just do it, get it into a stock market, get into some sorts of investments, get into that habit and then, if you can bump it up to 30 quid a month and 35, then 50 over the next, you know, and then in your 30s it becomes 100, 150, whatever. You will wake up as a 45 year old, or certainly as a 50 year old, with you know many tens of thousands of pounds, if not hundreds of thousands of pounds, if not, if you’re very lucky, maybe even seven figures. Certainly by the time you’re 55, right, and the reason that people don’t do that is because if it’s a choice between going to Nando’s or, you know, having a nice afternoon in the pub or whatever it is, and sacrificing that 25 pounds, why are you going to do that for this stranger that’s the 55 year old? You and that is it’s a well-known psychologist talk about is the behavioural bias that we need to bust through and you know the way you bust through. That is, by reading a lot and understanding stuff and thinking how awesome will it be to be to have a million quid of liquid capital when I’m 55, even if I have a pretty ordinary job, because that’s the other insight in the book is that you don’t need to be, you don’t need to be making a massive income. I mean, the example I use, which you’ll know but is worth repeating, is that I use when I’m doing a lot of speaking events is. So imagine a child is born and a wealthy relative can put 5,000 pounds in a junior ISA for that child the day they were maybe the grandparent or Aunt Agatha or whatever great Aunt Agatha, at 10 per cent per annum. And we’re just using 10 because it keeps the maths easy. Right, with no further investment, none, never, just five grand on day one, the day the child is born. So obviously, after a year you’ve got 5,500 pounds right. After two years you’ve got 61, 50 or whatever it is. The 10 per cent on 10 per cent. On their 55th birthday, the day they can first legally retire that pot, if it compounds 10 per cent for 55 years will be 945 grand. Wow, a five grand investment. Right, that’s the advantage of starting at zero, you know, and this is why do we have a pensions crisis when that is a reality? Now, of course, we can come on to this, but the push back there is well, don’t be ridiculous. You can never make 10 per cent per annum, you know. Interest, the cash eyes are paying me one or whatever. But then the American stock market has achieved 9% annualized, going back to 1872. Right, and so this is the stuff. Why aren’t we telling people about the stock market? The stock market is and again, god, I’m rambling now and I’ll come on to the genesis of the book but, but, but, but the. The other problem we have is the press, right, which is what I talk about ignoring the news. The press inherently focuses 99% of its attention on the 1% of bad things that happen. What that means is the only time the press ever talks about the stock market on the front page of the Daily Mail or the Sun or the Times. The telegram is when there is a stock market crash. There is never a headline that says last month, the FTSE went up 1.7%, or in the last 10 years, the FTSE has created over a trillion pounds of real value, or the S&Ps created 50 trillion or whatever it is. It’s not that much, but 10 trillion, whatever. There is never a headline that says that there is no mileage for journalists to say look, slow and steady investment could potentially bang out high, single digit, low, double digit annual returns, which, by the way, will make you a millionaire. There is only ever a headline that says the FTSE has crashed, the S&P has crashed, bitcoins has crashed, because that’s what sells papers and sells clicks. Anyway, I’ve chucked out quite a lot of stuff there.

Dr James: 23:30

Gold dust, all gold dust, all gold dust. That I’m glad that you said that, because you’re quite right. There’s a recurring theme amongst the press that we never really hear the good side of investing. Actually, I must say that that was the reason why I didn’t get into it as well, because I thought that the stock market had hovered around to see them and occasionally there was these massive downturns. I thought, oh, that’s not for me.

Andrew: 23:54

Somebody asked the FTSE today. Is it roughly the same level? It was 10 years ago. They said surely that’s crap, investment’s crap. But actually in real terms, once you account for dividends being reinvested in the equity yield, not the capital return, you would have doubled your money. Wow, just the dividends, yeah. And I would be surprised if 1% of the population understands what I just said. Truly, of course they look at it and go it’s crap, it’s properties better, or whatever. That’s why you need to have a much more nuanced understanding of such things, of course. In the meantime, the S&P has gone from 666, where at bottom the number of the beasts from the Bible right, I can bottom it at 666 in March 2001, and it’s now over 4,000. Who’s telling that story in the mainstream British press? Not enough people.

Dr James: 24:42

Yeah, true, yeah, true. All of that stuff was stuff that you put in the book. Was that stuff that you realised? That was what inspired you and then your life.

Andrew: 24:56

Let me get the three, with apologies for my informal genes.

Dr James: 25:00

Oh it’s fine.

Andrew: 25:01

Yeah, I don’t think you’re going to put it up this just because this, because you’re right. So that was the first version of the book.

Dr James: 25:11

Oh wow, that’s a different cover. It looks totally different. It’s unrecognisable.

Andrew: 25:14

It’s self-published. That was the second version where we hired somebody who used to be at Penguin to do things like simple stuff, like putting in an alphabetised index in the back right.

Dr James: 25:26

Yes, I now recognise that cover. Yeah, a bit of an upgrade.

Andrew: 25:29

we can say and then the same publisher as Charles Darwin, jane Austen, john Grisham, whatever came along in March A-Sine and said look, we’ve watched the success of these ones, do you want to do a proper one with a proper publisher? Nice, yeah. But I think the point I wanted to make is how did it come about? Like all the best things I mean we talked about compounding a minute ago five grand becomes 945 grand. But I did a presentation recently for an outfit called Knightsbridge Schools in London for a bunch of secondary school kids and the presentation was called the Power of Compounding in Finance and in Life and then basically made the point all the the easiest way to achieve stuff like this I mean, obviously there’s a fair amount of luck but is step by step not Hail Mary’s or hitting a six or throwing a touchdown pass is little and often and gradual and steady, and just like 1% a month becomes a story. That is why we’re now talking today, and so the reason for me saying this. I was angry on man in November 2007 in Miami, thinking, oh, I’ve got a right about this. It really annoys me how poor financial literacy is. And then I quit my job. I worked for another. I think three bonuses, basically like a terrible investment banker. But until I had enough accrued to support me, taking some time out of work, which I then quit that job in June 2010 and actually went to live with a mate of mine. He’d just moved to Tokyo, he was a lawyer and he had this massive apartment in Tokyo. I was like that’ll be quite fun. So I moved over there and I started just writing about this stuff and it was really just a series of essays like what is the stock market? What is compound interest, what is inflation? All this nuts and bolts, stuff that have become really clear to me. People don’t know. By your own admission, you’re a dentist or a very well-educated dude and you didn’t know, and we know that very few people know it, including investment bankers, as I said earlier. And I just sat there I actually sat there on my laptop in Tokyo just with all this stuff pouring out of me, and then I started this website, plainenglishfinancecom, and I put all of the essays up on the website, on my rubbish website that we the first version in 2010, which I mean like anything. You look at that and you’re like what was I doing? And my cousin actually my lovely cousin, mary said well, this is all very interesting, but you do realise you’ve got like 100,000 words on a website Nobody wants to read, so very inflation. Click here Like nobody’s going to sit there reading and then happily at the same time my brother’s best man is this wonderful guy called Tim Peacock. He’s an old family friend, obviously, and he’s head of digital at FTSE One Under Company and he’s also the COO, the chief operating officer, of plainenglish finance, and he knew how to take all that, all my nonsense, and self-publish it on Amazon’s platform. So we published it as an e-book ourselves in September 12. And then Amazon has this create space platform, which is print on demand of a print version which you just upload it and as long as it’s not defamatory or pornographic or whatever else, they’ll print it, and so they printed it in Jan 13. And then, yeah, like you said, I mean I don’t think my I had like 55 star reviews within like I don’t know two months and it was like, wow, we’ve sold like 220 copies this month and it was just crap. And so then the rest, and then again, it’s just been an incremental journey and I would say through luck rather than judgment. It was demand pulled through and people just found it. Everything we’ve talked about, the ideas in it, resonated with people. People found it really interesting and helpful and what I would say, without any sound to OTT, is one of the truly one of the greatest things about this journey to use a terrible Americanized phrase, but it is a journey. It has been 10 years now. Madly enough, it’s gone by in a flash. But one of the greatest things is people who, like only the other week, somebody got in touch with me and said I wanted to get in touch with you to let you know that I’ve been following your output for like many, many, like seven or eight years and I’ve just paid off 15% of my mortgage thanks to the investments that I made and some of the things that you’ve been recommending. And my wife and I were like you know. I’m sorry I’m going to. It’s a bit cheesy, I went to tear up, but I get messages like that all the time and more and more and more, and it’s like this stuff works. It really. It’s like it’s the money secret the rich understand. It’s get rich slow, right, and we can obviously come onto Bitcoin and stuff, but this is really simple nuts and bolts understanding the fundamental financial products that have existed for two centuries. There are great technology that was invented by the British and the Dutch in, like the coffee houses of London in the 17th century shares and bonds. Actually, bonds were invented by the Medici’s in Italy, basically, but or you could argue, the Samarians, going back many thousands more years. But anyway, people need to know about these things, they need to implement basics, they need to not be afraid of it. Then they get comfortable with it and understand it. They do simple stuff like direct debit. Save some money every month and it pays dividends.

Dr James: 30:54

So well, there we go so. No, that was like, like I say, all interesting stuff and the book when you started blowing up. That’s when you started getting a lot more exposure and presumably people got in touch with you regarding PR opportunities and things of that nature. How did life shift for you when that happened?

Andrew: 31:12

Well, it’s been to be honest, it’s only just really shifted. It’s 10 years since, jenny, and what I mean by that is so thought pretty much. I took a couple of years out of investment banking to write the first edition of the book and to get Plain and Rich Finance up in Lines. And then I got offered a job in January 13, working for a Swedish investment bank, and I’d been out for a couple of years and I your risk for all assessment I was like I just I just the way I didn’t back myself enough to be able to actually make like liveable amounts of money back then. You know, remember online advertising was much more nascent 10 years ago, I mean so, and it was a really good job offer for a great company and so I took the job offer. So the point of it being is that since then, so from Jan 13 until two weeks ago, I’ve had a full-time job in the city. Still Then, jan 15, I left that Swedish investment bank to go to. I was offered a partnership at a biotech specialist investment bank and I just worked with them for six and a half years, or whatever it is, and I just quit to go full-time playing the finance industry two weeks ago. Oh, wow, congratulations. I didn’t know that. Thank you very much. And so you know the answer to that is that yes, there’s been. There’s been a ton of opportunities, there’s been loads of interest. I’ve met loads of journalists, I’ve done loads of speaking events those are these sorts of podcasts and the book sells really well. Now We’ve also launched our own investment fund, which you know, a lot of your guys know, which, again, was, I was approached by two professors who’d read the book. Basically, I mean, it’s a long, lovely story as to how that happened, but it’s taken until now, you know, to sort of take the plunge. And the problem with that, with having a full-time job is, you know, is a really demanding full-time job at an investment bank in biotech, which requires quite a lot of Quite, a few hours of my week, and so I wasn’t. I’ve never really been able to fully engage with that PR, that press. But it’s just got to the point now where you know we’ve got 10 and a half million quid in the fund, we’ve got 12,000 email subscribers and they’ve got a few hundred more every month without doing any, without being able to work on the business full-time. That’s happening right In the book, selling whatever it’s selling. So I’ve just taken the decision to go full-time and drive the fund forward and drive our community forward and all the stuff that we’re trying to do, so hopefully it’s going to blow up even more now.

Dr James: 33:25

Awesome. Well, it’s a parallel with your investment, really, isn’t it? It’s the seeds you planted 10 years ago and now they’re coming to fruition, so it’s another example of what you’re talking about, in a way.

Andrew: 33:37

So I know how many units the book we’ve sold in total, right, and the word of mouth impact. You know, if 1% of people tell a mate, oh, I read this book and I like it, and then that mate buys the word of mouth, right? Well, the number of books we’ve sold today is obviously like 10 times the number of books we’d sold four or five years ago, right, the aggregate number of how many thousand books that are out there in the UK. And so that means that, by implication, the aggregate power of our word of mouth on sales is 10 times what it was. So you know, like exactly my example about the 5,000, 945,000, it’s the same with my book sales, right, you know, 5,000 becomes 5,500, becomes 7,000, becomes 12,000. But you know, that’s the trajectory we’re on. And now all I need to deal with is the dozens and dozens and dozens of messages I get every day, which is, to be honest, is quite tricky like, or every week, at least some days, I get dozens, but it’s another reason that to leave the job. I just couldn’t. I was fed up with not being able to reply to people. I just couldn’t, you know, leaving people hanging for weeks on end. You’ve said you’re lovely. My wife and I, you know, really loved your book. I just wanted to ask you about gold or Bitcoin or whatever, and I’m like I’m so sorry I haven’t got back to you in three and a half weeks, but I just couldn’t you know. Now, hopefully I can.

Dr James: 34:54

I totally empathize with your position through running my page and I’m just not quite to the same size as yours. But people send me messages and I do. I do respond to every single one because I just think it’s so nice that someone’s taking the time.

Andrew: 35:07

Your page. Your Facebook page is much bigger than our Facebook page, but the reason for that is because I charge five a month for Facebook page. Yeah, and, and, and I will do that because I couldn’t if it if it was because you’re 4,000 or 5,000 on you, yeah, and I can’t, I can’t, I couldn’t do that for 4,000 people and run the fund and you know, hopefully eventually because I’ll be able to hire staff and stuff. But that’s why we have to. I think I think a pint the equivalent of a pint a month to have, you know, somebody hopefully help you very significantly with your finances and maybe make a six or seven figure difference to your life, is quite good value.

Dr James: 35:48

But it seems reasonable to me. But no, guys, I do love every single one of you, I really do, and I will get back to you all eventually. I just need some time on occasion. So keep the messages coming. And the number of friends I’ve met made over the last six months has been absolutely on parallel to any other period in my life. So, no, I love it really. I’m very much a fan. The thing, the interesting thing go on, sorry.

Andrew: 36:13

To that point, I mean, lockdown has been. You know, I’ve wanted a live event in London. My plan is to do one live event a year in London and one live event somewhere else, whether that’s Belfast or Edinburgh or Leeds or Bristol or whatever, and have our members, you know, invite our members and, you know, have loads of beers and a DJ and like exactly to your point, have a face like I do a presentation, try not to bore everyone too much but fire everyone up, get them, you know, excited about finance, hear people’s stories of successes and challenges and have one of the. You know, we’ll be one of those events where everybody has to wear a name badge because there’s like 200 people in a big room and hotel or whatever. And then, you know, some decent music and lots of beers, and I’ve wanted to do that but I haven’t been able to do that because of lockdown. So that’s the other thing we’re going to be doing in the next few years and, you know, perhaps we should, you know, collaborate Absolutely. I’d love to come to Leeds and talk to your group whenever you like. Really.

Dr James: 37:08

That’s awesome. That’s awesome. I will love to take you up on that offer one day and I absolutely will. And coronavirus hopefully we’re on the back nine. Now we’re on the back nine with coronavirus. We’re coming out the other end. I really hope so. We shall see. That’s all pending, of course, but things are looking good. At this point I don’t want to speak too soon, because there’s been times where I spoke too soon before. Now I know better, andrew. The interesting thing about a book is it’s very much a snapshot into someone’s psychology and thinking at a precise time, at an era. How was your thinking evolved since then, if in any way?

Andrew: 37:44

So that’s a very, very good question. And you know, one of the headaches for the last few years, when I got the offer from Hodor and Stoughton to do the third edition I actually write this in the intro here there was for a while there were, not least because I had a full-time job, so I was doing it all like very early in the morning, on the weekend or whatever, like taking the last edition and top-entailing it and trying to do some new content, and I made the point in here that actually I thought perhaps I wasn’t the first author in history to think that producing a third edition of an existing book was actually harder in many ways than just writing a new book with a blank sheet of paper, because it’s just such a deep like oh, you know that section in there on, you know what? Have I got to change what I’m saying on property or gold or shares or whatever? And you’re right, I mean finance is a very dynamic thing and so, for example, this has about 8000 words on crypto and Bitcoin, right, which I didn’t have. I mean I thought about putting it in 2015. It’s actually a red Dominic Frisbees book on Bitcoin in 14 or 15. So we thought about it. But, yeah, there were things that needed to be changed, and treating crypto and talking about Trump, but you know, trump was obviously a big thing at the time, whatever else. But, that being said, what I did try to do and actually the introduction of this book says everything I’m saying right now is it needed to? But what I did try to do was 90% plus of the information in this book is timeless, seriously like or at least it’s 200 years old. But what is a share? What are interest rates? What’s the relationship between interest rates and the bond market? What is a bond? How do governments raise money? How does that impact you? How does that impact inflation? You know why does shares? You know why is our whole modern way of life completely based on the existence of these products? Like there’d be no toilet roll in boots, there’d be no beautiful buildings, there’d be no cars, there’d be no Teslas, there’d be no iPhones, without capital markets. Right, and it’s one of the biggest failings about it. It’s that important to our lives, to healthcare, to education, to travel to hotels, to, you know, beach bars, you know all this stuff all this pooling capital is, and none of that has changed. You know that is, and I also a lot of the presentations I’ve given in recent months. One of I talk about the most important investment theme in human history, which will remain unchanged forever, in my opinion, is human progress, the law’s law. The fact that processing power, her pound dollar euro spent, doubles every 18 months and has been doing that since the steam age, it’s completely nuts. And that exponential development is why this iPhone, you know, is more powerful than a computer. Put man on the moon in 1969, right, and we can run businesses. I can video call my friends in Australia or whatever, for free. I mean, if he said to me when I was at university in Birmingham in 1995, you know, not long in the future, when you’re in your career, you’ll be able to like video call, with a thing in your hand, your friends in Australia for free, I said, well, I have you. What a load of bollocks. That’s no, there’s no way. That will ever happen. What do we do? We’ll take it completely for granted. So the existence of these products and the, the idea, the march of human progress being the reason why can you make 9, 10, 11% per annum of real return in your life? Because humanity is progressing at 9% per annum, the S&P 500 is telling you that, right, and we, and with lots of volatility along the way, like coronavirus and whatever else, but if you just, as you say, zoom out and see the big picture theme, so so yes, it’s a static. A book is necessarily a static source of information from a point of time, but I, but most of what’s in there, I think, will remain. I mean, I’d like to think that 20 years from now, most of the content will be as relevant or very nearly as relevant then as it is now. And, of course, the other thing I’ll say I mean a bit of a plug, but I have a free email. You know, people just need to go to plainlashfinancecom, plainlashfinancecouk, check. Their name and their email address are the bottom of the landing page and I I send stuff out every only every two to six weeks. It’s not one of those really annoying daily spams. You sign up and you just have to delete it every day and it really pisses you off. It’s like I write something. You know. My next ones are going to be on ESG, you know, google, basically green and all good. Good. Corporate investing, crypto ETFs and a few others are my next few. Each of them is like anywhere between two and 6,000 words and sometimes I go bonkers on a Sunday and write a university dissertation and people actually people, read it. People love long form content. I mean, look at the success of something like Tim Ferriss. He’s an unashamed unashamed to write long, useful pieces rather than all this. You know his 200 words email. That I find all. Anyway. God, I’m standing like imagine the old man now no-transcript updated, thinking you know, sign up to the email address and there are something like 79 of my legacy pieces on the opinion section of our website on gold and whatever, like whatever. Lots and lots of bits of pieces. Anyway, there you go. Yeah, another very energetic, rambling answer to your question.

Dr James: 42:59

Keep them coming. They’re great. I remember watching iRobot when I was oh, I don’t know when. Irobot, you know, with Will Smith. Have you seen that movie?

Andrew: 43:06

Eight.

Dr James: 43:09

Poss, that sounds about right. I remember yeah, I can’t have been, maybe I was about 15 and I remember there’s a part in it where he talks to a speaker. Okay, he talks to the speaker in the room or the hi-fi system in the room and he says stop playing music. And I remember in the movie they made it this. Really they focused on that part because they wanted to illustrate how advanced technology was in this era that he was dwelling in, whatever it was, and there was robots and things. And I remember thinking to myself whoa, the day I can talk to my hi-fi system, that is the day we officially live in the future. Okay, and now we’re in 2021, right, we’ve got Alexa, we’ve got Google, we’ve got all of those things. And it just shows you that your frame of reference, when it never really moves beyond a certain point, when you have these seminal formative years, when maybe you’re a teenager or maybe you’re in your early 20s and that is forever your bubble as such, and anything else beyond that is just mind blowing to you, and I can feel that happening to me. And now we’re in this era where we’ve got iPhones. I mean, if you think about an iPhone, the power that you have in your hand, how many things you can do with it. I remember having a Nokia 3310 with black and white playing Snake on it, okay, I remember that, yeah, and I remember thinking that was what a phone is and in my head that’s still what a phone is, okay. And now we’ve got iPhones and it’s just mesmerising. And as well as that, what you were saying, andrew, mers law you know. Another thing about MERS law is because it doubles every 18 months, it’s compounding as well, so it’s four times in 36 months, it’s in 54 months, it’s eight times and it continues 1632, 64128, 256, not 1234567,.

Andrew: 44:57

It’s geometric, not linear, arithmetic not arithmetic but exponential. That’s right. By the way, irobot was 2004,. I just looked it up on my iPhone 2004,.

Dr James: 45:09

Wow, okay.

Andrew: 45:10

You’re right, and God, that blows my mind. That’s slightly worrying actually for me.

Dr James: 45:16

Me too. Me too, I thought I could have sworn, it was more recent than that.

Andrew: 45:20

But there’s a very well known. So one of the things about studying finance generally is studying psychological biases, which is how human, how our brains work and how that affects your ability to invest, and there are over a hundred of them. If you Google cognitive biases, this is a huge area of economics now, behavioural finance, basically. How do we, why do humans make stupid decisions about all sorts of things? By the way, your camera’s got owed.

Dr James: 45:45

Yeah, sorry about that. I just got knocked a little bit. I’m back.

Andrew: 45:48

That’s all right. And one of them is one called a hedonic treadmill, which is basically the human beings we’re very well adapted to adapting, so we become used to stuff very quickly. So all the things you just said that were miraculous would have been miraculous to us 15 years ago. Certainly somebody in the eighties. I went to Epcot Centre in Florida in 1980.

Dr James: 46:15

I’ve been there. I’ve been there. My dad said we’ll go to Epcot Centre instead of Disneyland and they are not one and the same. Disneyland is a lot more exciting than the Epcot Centre. Cruel, did he not take to Disneyland when you got there? I still haven’t forgiven him. I still haven’t forgiven him.

Andrew: 46:33

We went to both, so you know small mercies for my dad.

Dr James: 46:38

No, it’s okay. I’m very grateful for the holiday. Dad, if you’re listening, he probably is going to listen to us. No, I’m very grateful that he took me to Florida. It was great.

Andrew: 46:45

But anyway, the point is it’s an analogous to what you said. In the middle of our I-Roberts I remember there was a sort of space age future in the big dome thing and it was these people in spacesuits with video calls and the video calls were in these TVs that were like the size of a car. And you know, in the year 2100, we’ll be able to do video calls with the massive cathode ray televisions that weigh half a ton and within my lifetime we’ve got an iPhone. It’s just this tiny little thing. It’s my blame, but the hedonic adjustment is the fact that we become we become enured to these things very, very quickly and we’ve taken for granted because that’s how humans survived right adaptation. But it’s a real shame because it means that people are always more pessimistic and take for granted the amazing fruits of human progress than they should be, and that’s another thing that I write about. A lot is actually explicitly trying to take a step back and realise. There’s this great quote from a Victorian historian called Thomas Bavington Macaulay. He says by what methodology or by what reason do we see only progress behind us and expect nothing but deterioration in front of us? And we’ve got to stop doing it. And it’s, like you know, one of the other themes I return to, which again because it’s this sounds a bit serious, but it’s to do with finance, because if you believe this stuff and there’s so much evidence that you should believe it, then what does that mean for financial assets? It means they’re going to go from bottom left to top right and you will make real wealth right, and the problem is that we are in the head on it. Trust treadmill means we take everything for granted. We’re inherently pessimistic. We think that the future is always going to be shit. The catastrophe has been wrong for 500 years. The world’s again and the world’s going to end, the world’s going to end, global warming, blah, blah. The reality is they’ve all been wrong for 500 years and all that’s happened is we’ve become more peaceful, longer lived, more leisured, better travelled. You know, I mean in the 1940s my grandparents had to fight the Germans and the Japanese. Like I am now friends with lots of German and Japanese people, you know, and I wouldn’t dream of ever going to war with them. That is far more important. These long run themes are far more important for your sort of future health, wealth and happiness than Brexit or Coronavirus or the fact that Trump was, or any of these things that everybody are press spends its life looking at, but it takes it. It’s a very rare person who takes a step back and tries to think, tries to proactively think like this and, by the way, I would consent, it’s a far happier and wealthier person who does, you know, and this is why I write so frequently about ignoring the news. But anyway, again slightly tangential, but I feel this stuff is really important.

Dr James: 49:26

You mentioned. I believe it was your book that I read. You were, you were thinking out loud in the book or you were hypothesizing that someone might conceivably argue with you that they might say why would I invest in the stock market? What if there is a world catastrophe? What if there is a nuclear war or any of those things? But the trouble is, if you go through life with that attitude, then you’re never going to be able to take advantage of any investing, basically, and you can never take advantage of these wonderful things. And you also said in the book that if there is God forbid a nuclear war, anything of this nature, you’ve got bigger fish to fry. You’ve got more things to worry about.

Andrew: 50:04

And, by the way, if you invest in assets and become wealthy, then you’re more likely to be able to afford to buy a boat, a ranch in Argentina with 100 head of cattle and some fresh water with a lake full of fish and bugger off there and hide behind a big electric fence with loads of guns and ammo, I mean, which you know not. So people do that, but it’s the multi-millionaires who have accrued wealth who will actually be able to do that in that horrendous nightmare scenario. But you can’t live your life based on a 0.001% possible outcome and you know, again, that’s sort of thinking. Coronavirus, coronavirus has affected less than 1% of the world’s population. Sorry, not affected, but actually, you know, been really, really conscious. It is not the Spanish influenza, and you know we’re on, we’re probably on slightly thin ice here. I don’t know but little the fact that lots of people have suffered and lots of people have died, but ultimately it’s again the media spends. I mean, every single day I go downstairs to have breakfast and my wife has a good morning, britain on in the background, and all it’s talking about every day is coronavirus, this coronavirus, that coronavirus, this. You go out in the street, you’re going to walk past 10,000 houses, statistically, before there’s one where somebody died of coronavirus. Like it’s the law of big numbers, right, it’s not 0.1% of whatever it is, but but anyway. The one thing I did want to come back on, though, is because it’s going to be open to Christmas, and, you know, the environment is a concern. We are depleting fish stocks. We are, you know, and and but what I? My answer to that is there are two answers to that, and again, I think we worry massively overly about this problem. I genuinely believe that, and why do I believe that? Because I’ve been working biotech for the last six and a half years. Some of the cold face of sort of human scientific effort, right, and I believe that it’s overdone for two reasons. Firstly, the population of mankind is likely to go massively in reverse in the next 20 or 30 years. We’re like we’re going to probably peak at nine or 10 billion, and then we’re going to go right back the other way, and the reason for that is this is there’s a brilliant futurologist called Kevin Kelly who basically predicted the Internet. He found it wild magazine and it’s really worth.

Dr James: 52:02

Yeah, yeah.

Andrew: 52:03

He’s a brilliant, brilliant guy and it’s worth reading his stuff and listening to what he has to say. But basically, the mathematical imperative here is that every single country that democratizes, has education and becomes wealthy sees its birth rates plummet. You know, like Germany, switzerland, japan, everywhere, the only reason that population of places like Britain and America keep going up is because of immigration, because in developing world countries whether you know, whether it’s people coming from Turkey or India or whatever that this hasn’t happened to them, that they’re still having lots of, lots more children than the replacement rate for children. But that, but, as every African you know, all these countries advance and have better education, more female participation in the labor force. What happens is the population rate falls. So they’re actually weirdly enough. We’re going to have to start thinking about an economic system that can’t rely on human population growth for growth. So, which is going to be a pretty interesting challenge to the way our whole economic systems work for the last 200 or 300 years, but I think it’s a challenge we can surmount, because all it means is that so we, the per capita wealth of everyone, will go up, because if the wealth is fixed but a population halves, everybody actually is going to be twice as wealthy, and that’s actually what’s already happening. I mean, I did a trip around China for two weeks in December 19. It is absolutely mind blowing what’s going on out there Now. Again, like so many cultures before them, they’ve over invested. They have all these empty cities and you know, thousands of miles of freeway that aren’t used as selfish. It’s a bit of a shame, and you know, fish stocks are being depleted because there are 1.3 billion Chinese people who are now can afford to eat fish and all this stuff. But I think that the great sweep of history will be that, which is a very encouraging thing. And again it goes back to why I think investment is really important, because who is going to solve these intractable problems? It’s companies, it’s capitalistic companies. Who is going to blanket the Sahara Desert with solar power so that we can then have free electricity pumped into Europe and hopefully the rest of Africa, just from the solar power sitting in the most useless land in the world, in the Sahara and other deserts throughout the world. That is a vision that actually there are companies working on those problems. None of it makes it Tidal generation. You could have masses of tidal power generation sitting in the middle of the Pacific, the middle of the Indian Ocean, the middle of the Atlantic Ocean, with a plumb line into the States, into Latin America, into wherever, which gives us all unlimited free electricity. And imagine what we can do with that. We can do desalinization, we can do better healthcare, we can power robots that care for the elderly and I often talk about. We are basically in a race between Mad Max and Star Trek. I think, based on the evidence of the last 500 years of human progress, that Star Trek is going to win. We’re going to be very wealthy, we’re going to have unlimited power, we’re going to have phenomenal healthcare, we’re going to have robots to help us with everything, and not Mad Max, where it’s going to be coronavirus, brexit, trump, end of the world, run out of fish, all the animals die and I spend my life proactively looking for evidence that it’s going to be Star Trek, not Mad Max. So one of the things I give, one of my charitable donations I make every month, is I fund half a dozen big cats for the world. I fund right For my little nephew. I used to get them a present. They get a cuddly toy and other things. It’s a few quid a month and you get a little letter from the tiger in wherever, and tiger populations have doubled in the last 10 years since I started doing that, and that’s one small example. Wolves have been reintroduced to the American wilderness in places like Wyoming and Idaho for the first time in a century, right, and they’re thriving. None of this stuff gets like our mainstream press is moaning about coronavirus every single day and they’re not picking up these hundreds and hundreds and hundreds of other little data points. They’re actually really encouraging and positive and I mean again, I’ve gone right off on a tangent, a bit of a rant, but I really care about this stuff and I think this stuff is ultimately, when you come right back down to it, it is this reality that makes investment succeed, because it’s all the kind of solve these problems that are going to make you money. You need to look through the nonsense and the negativity to this stuff and get on board, basically.

Dr James: 56:19

I think the passion is great, andrew, and I think that it’s important because, as you say, it’s not something that we hear every day and we have this overarching, overbearing stream of negative information, which is not not representative in any way, and it sells clicks, but it’s no good for us.

Andrew: 56:39

I can logically.

Dr James: 56:43

Yeah, I must admit, I actually don’t really read any newspapers anymore, because I just I think there came a time where I read. I just thought to myself am I actually gaining anything from reading this? Is this something that I didn’t know before, and is this something that’s going to help me? And as soon as you start looking at things through that lens rather than just the drip feed of negative information which only makes you feel negative as well, it’s another interesting way of looking at it. You just have to think to yourself what am I? If you go out with the mindset that you want positive positivity and you want positive feedback, it’s a self fulfilling thing past a certain point, and that works the same way for negativity to, and I just don’t feel like I’m gaining anything by reading that sort of material.

Andrew: 57:24

I agree, but now you can curate your own news. I mean I subscribe to think of future crunch dot ch, which basically is a good news website. It goes out in the world looking for good news, positive stories about developing world, about medicine, about energy, power generation, about the conservation, marine conservation, all it goes looking for positive stories and they do they every year. They do 99 good news stories you didn’t hear about this year in December, towards the end of the year, and it’s magic. None of it makes it into the sun, the Daily Mail, the, you know and so. But the great thing is now we’ve never been more empowered to curate our own news sources and ultimately you make your own reality. And people might say that’s really callous, because you don’t care about people are suffering. And I would argue the exact reverse. You know what is more, what a more powerful impact can I have that that many, many thousands of people read this book and get in touch with me and say, actually, you know you’ve made a real difference to my life and we’re welfare and happier. Or to vote, but Boris Johnson, I mean I’m completely disengaged from politics because I think it’s it’s it’s evading us nothing, it’s an anachronism. I think we could potentially live in nation states in the future without any political. I mean, this is we’re really going off piece here now. But but you know why can make a much bigger difference to the world by that one, by voting. And you know that’s my particular view, but I think the more people take that view. Do you know if you heard of a kid called boy and slat?

Dr James: 58:48

No, I can’t say half.

Andrew: 58:50

You have heard of Greta Thunberg, right? Yes, so Greta Thunberg and I call it a race between boy and slat and Greta Thunberg, Greta Thunberg, tons and tons of press, massive, global superstar. You know, standing outside a school in Stockholm bemoaning the fact that we’re us horrible catalysts are destroying the world. Boy and slat, same age, from Amsterdam or somewhere in Holland, has a business called the ocean cleanuporg or the ocean cleanupcom has gone out and raised money from venture catalysts to develop a machine that is going to go out into the middle of the Pacific and clean up all the plastic. But you know, I think we need more boy and slats and fewer Greta Thunbergs. That’s just my view, yeah, rather than just really shit, everything, shit, everything, shit. Okay, get out and do something about it. You know and there are lots of people are and they get no press. You’ve never heard of boy and slat. You’ve heard of Greta Thunberg. I reckon the same is true of pretty much everyone watching this show. The show, sorry. Podcast.

Dr James: 59:49

That concludes the first episode of this two part podcast with myself and Andrew Craig. If you enjoyed this episode, please tune into part two, where Andrew and I will discuss investing in further detail. Welcome back to the second episode in this two part series with myself and Andrew Craig. We pick up where the conversation left off in the previous episode.

Andrew: 1:00:17

Now I said I’m slightly concerned. We haven’t talked about Bitcoin.

Dr James: 1:00:22

Bitcoin is on the agenda. Bitcoin is on the agenda, absolutely. We had a few things. We’ve talked about the philosophy a lot, but maybe now the next few things that I had planned was more about the actual nitty gritty and the meat and bones, meat and potatoes of investing, because there is a school of thought. Now, I love your investment theories. I’ve read your book. I understand completely where you’re coming from. It’s about balancing capital appreciation with capital preservation. That’s, you’ve got your bonds. You’ve got your bonds for the preservation for when there’s a down turn on your gold, and then you’ve got your stocks for the appreciation for when the good times are rolling. There is a school of thought. There is a school of thought that says, if you’re young enough and if capital appreciation isn’t something that you, let’s say, you want to take your profits within the next five years, okay, then you are more at the whims of the stock market, because you’ll know you’ll know more about the stock market than me, but it’s been shown over five years that you’ll all, you’ll always have more money than what you started with after five years, right, okay? So if you’re going into the stock market and you’ve got an over five years, I’m rising, yeah, investment strategy, investment plan, plan for taking your profits, plan for your retire, all of those things that. Would it not be more, because stocks have been proven to be the highest returning asset over any period of time, would it not be more sensible to have a 100% stocks portfolio and just take the hits on the ups and downs? What do you think?

Andrew: 1:01:57

I covered exactly this in my second book Live Unless Invest the West.

Dr James: 1:02:01

Oh, I see, so I wanted to ask you about your second book as well. We will dove into that.

Andrew: 1:02:05

Yeah, so I guess I’ll. Perhaps I should have run ranting about the environment and Greta Thunberg. I’ll have to focus more on this one. When you said what’s changed from the first book, well, I mean, so there’s a very simple answer to what you just said and it’s a very well known, classic kind of approach to investment, which is a thing called 100 minus your age, and so basically what I’ve done this book really there was actually there’s a five email series on in the opinion section of our website. If you just if you search plain in the finance 100 minus your age you’ll find the first one of five. And basically this book is that five email series and a whole load of other stuff that’s emerged over the last few years and really answering this has got really dull stuff like which stock, how to open an account with a stock broker and what is a nicer and this is much more nuts and bolts like prescriptive. This actually goes hand in hand with our Facebook community and you get it for free. You get the digital version of your join. So 100 minus your age treats exactly the point you just made, which is basically if you’re 20, so 100 minus your age is an idea that’s been around since probably the 1940s and it’s pretty conventional in the States for financial advisors and they basically say, yeah, if you’re the younger you are, the more risky your investments could be, the more expertise they could be. So the old approach to in, like from the 1940s, probably until about 10 years ago, was it’s basically 100 minus your age is what you own in equities. Or, put another way, you own your age in bonds. So you’re 50, you’d have 50% equities, 50% cash and bonds or bonds, whatever. If you’re 70, you’d have 30% equity, 70% in cash and bonds and if you’re 30, it’s the other way around. You’d have 70% in stock market and 30% in bonds and basically my, you know, the rule of thumb is that you rebalance that every five years. You don’t have to mess about every year going on 64, whatever. You just do 50, 45, 40, et cetera, et cetera. The problem with that idea in this day and age is that that worked far better when bond rates for six or seven or eight or 10%. So there’s a 54 year chart of the US 10 year which is basically interest rates the biggest global bond market which kind of sets global interest rates. Ish, I’m just trying to find it, but perhaps right. So that’s, you can see that.

Dr James: 1:04:33

But the average.

Andrew: 1:04:34

Yes, so basically that’s, interest rates in the 80s were 15%. I used to make 11% in my post office account when I did my paper round when I was 12. And now they’re half a percent, okay, yeah. And the average is probably about 6%. So you had a million, if you manage. There are two problems with that. Firstly, if you are 50 and you’ve got 50% bonds and cash in an area where you were, the 50% that was in bonds was making, you know, six or seven or eight or even 10%. That’s still really contributing to your ability to grow your wealth, right, yeah. Now that it’s half a percent or 1%, it’s really not. And so, to your point, you probably want to have a much higher allocation to equities, right, because there’s no use in making half a percent of 1%. It’s going to really take you far longer to make sensible amounts of money. Going back to my example of 5,000 becomes 945,000 at 10%. It’s no good. If you’re making 1%, the maths don’t work anywhere near the same. You end up with nothing. I mean, that’s called underperformance risk, which is a very real thing, and that is why no one should ever own a cash iser in my opinion. It’s just the most disastrous. These two, you’re losing real wealth every year. I think it’s a scandal that we have financial journalists in this country. You actually talk with a straight face about which cash iser. I mean, it’s just ridiculous.

Dr James: 1:05:52

Yeah, because let’s not forget that when you put into a cash iser, it takes off your total likes of contributions, doesn’t it? There’s money you could otherwise be using. I should get you 20 grand, your 20 grand. Doesn’t that come out of your 20 grand?

Andrew: 1:06:05

I think that’s right. You can’t do more than 20. So that’s right, yeah, yeah. But if you want to save cash, just save some cash for whatever a month’s worth or three months’ worth, or six months’ worth, whatever you feel comfortable with. But everything over and above that must be invested to beat inflation. There’s no point in having it sitting at something less than inflation. But anyway, the other problem is with this low interest rates. If you retired in 1995 when interest rates was 6% or whatever, 7%, and you’d managed to build a pot of a million quid, you’d be able to take a million quid and pay yourself 65, 70 grand a year of income off that pot. Right, because interest rates are 6.5%, 7%. Now you’re lucky you can pay yourself 10 grand. So you’ve got a million quid that you’ve managed to get to by doing all the things we recommend over a lifetime. Fantastic result, except, no, because the risk-free income that you can swap a million quid for now is 10 grand a year. I mean and people are again this is a story that people don’t understand. That is a disaster. So, anyway, the whole focus of this book is explaining. Ok, so rather than thinking about bonds and equities, what you need to do is think about aggressive versus defensive. So if you’re 50, you’d be 50% aggressive, 50% defensive, and you need to start thinking a little bit more in a more nuanced and sophisticated way about what defensive could be. Aggressive is very easy. Aggressive could just be the S&P 500, the MSCI world, the low world, maybe a bit of Bitcoin for some of your aggressive biotech small, I mean, most of the biotech has been going 14% per annum for the last 15 years. Smaller companies have done 15% per annum for 55 years, but nobody knows this stuff. Now, the crucial importance is that they don’t do it every year reliably. They have massive volatility, so sometimes these things halve and what you’ve got to it’s very important to deal with, to treat volatility as you grow wealth right. So, anyway, the investment fund we’ve launched is explicitly for the defensive bit and the idea is that you basically use backward-looking trend following and global multi-asset. So you’re in the S&P, you’re in the FTSE, you’re in gold, you’re in oil, you’re in whatever, and then, in a scenario like last year, you come out and go into cash just using a formulaic, rules-based, backward-looking, trend-following strategy so that, instead of where the S&P falls 55%, like it did in 070809, you’re out and in cash. Whilst that happens Now you never sell at the top and you never buy at the bottom, because that’s the nature of it, but over evidence going back to 1872, it lifts returns and massively reduces that max downside. So that means that we hopefully think we have a defensive product with a max downside of sort of 5% or 10%, peak to trough worst negative year of about 6%, but that can capture 7.5% 8% over a business cycle, which means that defensive bit of your money can actually get you to these terminal values and pay you in retirement. So that’s a bit of a long-winded answer. But yeah, the way to think about being more into equities is to use this idea of 100 monosie or age and I totally agree. If you’re 30, there’s no reason you shouldn’t have 70% of your cash in more aggressive things in biotech and smaller companies and all of that stuff is covered in here. And if people don’t want to buy the book, we’ll join our group. It’s the five email series on the website and it’s all that. Content’s free, it’s just accessible.

Dr James: 1:09:36

Cool, cool, yeah, because that was always. I heard of the rule of 100 minus your age and the stocks and bonds thing, but now what you’re saying is that that’s slightly shifted in its thinking, in its narrative, and it’s more we should be thinking about the idea that that proportion should be defensive rather than just aggressive.

Andrew: 1:09:59

Because in the 1960s or whatever, if you were a retail investor, you could only buy bonds. You could only buy the Dow Jones or the US 10 year. You can buy crypto and biotech and eat it. So now this is again. Another point I made in the first book is how much better financial services are now. I talk about 10 asset classes in my book. That’s eight more than just bonds and equities. So it’s a way of thinking fundamentally about aggressive versus defensive, which one’s choose, keeping it really simple, big, liquid, simple stuff. And the other thing to say quickly is, of course, you could perhaps use 120 minus your age instead of 100 minus your age, for a couple of other reasons. Life expectancy has gone up a lot, so if you’re going to 100 minus, your age is in an area where average life is like 83 years old, but if you’re going to live to 110, that’s not much use to you. And similarly I’ve joked about this in presentation the other day One of my clients from the job that I just quit is 90 years old. Bless him. He’s an amazing guy. He’s what he was. He made partner at a stock breaking firm in the early 60s and he’s still going, and he can drink. I mean the last time I went for lunch with him, he can drink more wine than it’s just absolutely insane.

Dr James: 1:11:12

Top man. That’s impressive. I hope I’m like that when I’m 90. What was it? 90 hit, he’s 90.

Andrew: 1:11:17

Oh he’s 90. He’s 90.

Dr James: 1:11:18

Yeah.

Andrew: 1:11:21

Well, he was 88 last time I went for lunch with him. I don’t know how you do it, but the point being is that he’s still earning money at 88. He’s still earning a pretty decent crust. So he didn’t retire at 65. He’s had 20 plus more years of earnings. So obviously that changes the equation. So he could be more risky than 100 minus your age. Actually he might use 130 minus your age, which is crazy. But these are all, as I said, I cover all that in the second book and I like to think that it’s again. Whilst the last few minutes of this discussion have probably seemed a bit complicated and I’m speaking very fast, actually, if you get down to, what I’ve tried to do is paint the picture in a really simple first principles away. It’s like, okay, so you’re 40 years old, what percentage aggressive and what simple things would you think about for each of those? And then kind of go la, la, la, la la and ignore all the pick and mix stuff, this and that and salespeople calling you, just go back to the most big, liquid, simple stuff like the S&P 500. Or you might buy a, buy a set. But that basically outlines the sort of top-down way of thinking about and doing that.

Dr James: 1:12:36

We’ve mentioned Bitcoin a few times In your original book, you are, whilst you’re not necessarily negative about it, you are on the fence about it, shall we say, and you said that, whilst there could be massive upside, it also could be something that goes to zero. And I believe, I believe from memory that you said if someone was planning to get involved with the space, to allocate no more than 5% of their total invested capital to the space. How do you? Has your opinion shifted since then? Are you still on the fence? Are you even negative or bearish by the time?

Andrew: 1:13:10

I think so. To me it’s quite simple. It’s a highly volatile, speculative, unregulated asset, which means that I think it’s as appropriate for somebody’s portfolio overall as a very risky share. So I would probably never put more than between 2% and 5% of my money into a very risky share like a single biotech company or an oil and gas company that’s out in Alaska trying to find oil and it’s on the London stock market worth 100M quid. One day it might be worth 2B quid and you make 20X your money, but in the meantime it might also drill for oil and spend 100M quid trying to get oil out the ground and find a doughnut and have zero and be worth nothing. So the other thing about I guess if my thoughts have moved on further. The other thing is I think it’s really really important that you think big picture about what you’re trying to achieve financially and what you need. I don’t actually need Bitcoin. I don’t need something that is unregulated, incredibly volatile to achieve my own personal financial goals, and I think most people don’t. There are hundreds of thousands of companies. There are ETFs on hold, indices, there is gold. There’s such a paradise of opportunity to invest in, all of which is regulated. There is actually somebody checking that it’s real and that lawyers have gone over it and prospectuses have been written and whatever else, rather than some Chinese whale wakes up in the morning or Elon Musk tweets and suddenly the market’s all of them 50%. Bitcoin could go to a million per Bitcoin. Right, and it really could. It could be, but there’s incredible uncertainty over that. So what really pains me is what I see a lot which goes back to what we said at the top of the call is the number of people, especially people of a certain age, let’s say, under the age of 40 or even under the age of 50, what I see on social media who have never thought about an ICER, who don’t know what a share is, who’ve never thought about, don’t know what the equity mark is. They don’t know how to buy the S&P 500. They’ve never looked at the FTSE, they’ve never looked at how to invest in gold. They’ve not really thought about their pension, all this stuff that’s been around for 200 years, right, the technology of investment that mankind has been using for 200 years, and they’ve gone straight past all of that and they’re investing all their money and, in some instances, borrowing on credit cards to invest all their money in crypto because of the whole thing about, well, bitcoin goes to a million and I’ve seen people online talk about how they’re so excited that they’re going to be able to turn 500 pounds into enough to pay for their retirement, their kids going to private school and retirement, and it’s like I saw the same thing in 0708, I saw the same thing in 992,000, with 992,000 was the dot-com crash, when petfoodcom was valued at like $50 billion or was losing one on every can of pet food and shit. And I think Bitcoin is an entirely Bitcoin and crypto and it’s a very interesting space intellectually blockchain, what it might do for the world, ether for sure, and Bitcoin could go to a million, but I think that there’s real uncertainty about whether it will or not, and so for me, I don’t want to deploy any capital in it because I don’t need to. I have very, very clear goals financially about what I need to get to in order to fund me and mine, look after my wife and kids and whatever else, and I have real domain knowledge about a whole bunch of investments that I’ve been working with for 22 years, and so why would I risk any of my capital? And something which Elon Musk wakes up and tweets and it falls to his thumb. Even the risk reward is not attractive to me, right? Because I don’t need to achieve my financial goals and live a great life. I don’t need to buy something that might go up a thousand percent but might go to zero, and I don’t want to. So, you know, having said that, as I said to you, I’ve just quit my job and I have my, you know, I need a lot of capital. I might not be able to pay myself anything for the next two, three years, right? So I’m slightly more risk averse, you know, right now, than I might otherwise be. If paying is fine, it’s just seeds greatly and we end up with a hundred million in our fund and, you know, big and everything’s going really well. At some point, I probably will allocate a bit of money to Bitcoin or Ether or whatever, just because it’s interesting and it’s speculative and maybe it goes up a lot, but there’s no way in hell that it would be like 50 percent or 80 percent or all of my investments. And it drives me nuts how many people are taking and I know you don’t take that approach, but they’re an awful lot of really, really evil people online, you know, preying on people on Facebook saying, oh, you know you can’t lose. Look at the and they think the most ridiculously so in the regulated arena, you would go to prison for doing what they do, which is, they say, you know, cryptocurrency why has gone from this to this, which is up 10,000. If you’ve done this, you’d be a millionaire. That is totally illegal to do, whether if you’re broke in biotech or mining or normal equities and it’s not in. It drives me nuts that that’s not illegal. These people should go to prison, right, because it’s so irresponsible. And any volatile asset you know. The other fallacious thing about that is if you say, oh, bitcoin’s gone from a hundred dollars to 60,000 dollars, right, that does not mean that everybody who owns it has made that return, because a hell of a lot of them bought it for 19 thousand dollars In December 2017, when they got super excited and it was on the press every day, and then we’re down to $3,000 to your set. The more volatile an asset class is, the more likely is you’ll cock it up and because human emotion is, as a really, really strong part to play, right, and you’ll go oh, everybody’s buying, every selling. You know, it’s just happened again in the last two weeks. Right, elon Musk wakes up one morning and tweets whatever, then the Chinese do whatever. I don’t want to own something or expose my capital to something where there’s that risk, even if it might end up being worth a million dollars.

Dr James: 1:19:14

There’s nothing that you said that I would disagree with, nothing that you said that I would disagree with. I think that’s totally reasonable. And with investing, that’s the interesting thing about it there’s no one shoe that fits and that comes into trading as well. There’s horses for courses, there’s different styles and people chase the gains inverted commas. But what works for you might not work for someone else.

Andrew: 1:19:36

That’s the long one, the short of it, okay, and absolutely know yourself, Like there’s a great book called although I forgot what it’s called but Dr Van Thaub, about trading.

Dr James: 1:19:45

Okay, van Thaub’s, trade your Head for National Freedom here we go Over here, yeah, and the first chapter.

Andrew: 1:19:52

He says you know, the most important factor in your success is you Like. You have to know yourself, you have to know your risk tolerance. But, if I may, the other thing I wanted to make with apologies for interrupting you, though, because I think it’s really important, is one of the great life lessons I think we should all learn I’m still learning it at 45 is how you deploy your time is super, super important. Right the 80-20 rule you get 80% of your results from 20% of your actions. So focus on the 20% of your actions that actually matter Right Now. One of the other problems to me with crypto is it’s incredibly time consuming to do it well and to do it properly. And I don’t have the time. Right my time. Every hour of my time that I spend working or playing with finance, doing a call like this, writing a piece, a thought piece about the SG, whatever, is to me, a far better use of my time than an hour spent looking at screens trying to work out what Bitcoin or ether might do next week. Truly and I think that’s very, very firmly true for somebody in their 20s who should, frankly, be working to become better at whatever their main job is, and the ROI on that activity will be far higher on a risk-adjusted basis than the ROI on messing about in crypto groups going. What’s it doing today? Is it up, is it down? Hodl, what a waste of time Like and now I know you’re a lot. The counter-oam is, if you’ve got 5% of your net worth, you have somebody who’s got a good handle on what is Cardano, what is Ether, what are the merits of these respects Thing and says, okay, so own 10 of them and then just leave them for 20 years because that could really materially impact your net worth. Yeah, that is probably a sensible thing to do, but I’d rather do that with biotech names. You know I really would because they might cure cancer. I mean, I’ve got a couple of companies I think are literally worth a hundred times what they’re currently trading at. I’m about to put in my pension, right, and that’s because they might cure cancer. I think that, to me, is a much more compelling investment thesis than really uncertain new category of asset costs. That’s unregulated and they can get winged around by Chinese people in Wangzhou, you know, because they’ve. I mean, you know, anyway, I’m rancing and I’ll shut up and let you say your piece, with apologies.

Dr James: 1:22:09

No, it’s great. No, I love to hear your opinion on it and, like I say, you haven’t. You haven’t said anything that I would necessarily disagree with. When people get into the space, I don’t think they realize just how much time it takes to water the garden and plant the plants and maintain your portfolio, and whilst there are a lot of hacks to make yourself more time efficient doing that, there’s an absolute ton of those things that I learned through time that made me way more efficient. I would say you still have to keep an eye on it every day. As for actively trading it, for me personally, sometimes I go a whole weeks and I don’t move anything around, and then sometimes there’s volatility, there’s a flurry of activity. What I do is I make it a lot more efficient by setting trade alerts on my phone and on trading viewing so I know if it hits certain prices. I don’t have to be in front of the computer. But absolutely that is not for everyone, and if someone is not prepared to do that, then my argument would be that you shouldn’t really be buying many of the altcoins, so many of the alternatives to Bitcoin and Ethereum, because really we talked about pumping, dumps and manipulation a second earlier. 99% of those are pumps and dumps. Ok, 99%. And, by the way, this is coming from someone who loves crypto. Ok, this is coming from someone who loves it. Yeah, 99% are pumps and dumps. However, one of the best ways to invest in crypto although maybe you might not agree with it on an ethical basis is to be able to suss which of those charts and which of those cryptos are pumps and dumps. By assessing the chart, ok, and once you can do that, you can be on the right side of the smart money, rather than the person who’s still buying Dogecoin or Shiba Inu at the prices that it currently is, because, come on, if you look at that, that is so clearly a pump and dump. You know what I mean. And there are people who bought that thing when it was really cheap and they’re selling to people like you so that they can make money. So absolutely anybody who is actively buying Dogecoin or Shiba Inu at these prices, I would encourage you to think twice about that. It is never something that I would buy the way it looks. At the minute we talk about market cycles, those are towards the end of their market cycle and, as well as that, we mentioned something earlier. Maybe I’m sure you’re aware of this. Well, you did mention it. Actually, it is possible to passively invest in the crypto space, but there’s only, there’s only two cryptos that I would do that with, and you might even argue there’s maybe somewhat argue there’s three. Ok, those cryptos are Bitcoin and either and Binance coin, because as long as there’s Binance, there will probably be Binance coin. But the third one I’ve said, maybe not everybody would agree with that, not even everybody would agree that Ethereum is a good long term hold, but the majority of the consensus in in the space would say that Bitcoin is your only buy and hold, because whilst the space has value, bitcoin will have value. That’s the philosophy that a lot of people hold.

Andrew: 1:25:19

But I’ll make a comment about it. So I was right. I was a stockbroker with Swiss Bank in 99, 2000, when the dot com boom was going on. Right, and Nokia. I believe that Nokia peaked at about 200 billion euros of market cap and it was literally was 80 percent of the finished stock market. Right, everyone owned a Nokia phone. You mentioned a Nokia phone. Everyone owned a Nokia phone and everyone thought Nokia. Nokia is the big dog. You know, big dog 800 pound gorilla bellwether that is good as one the mobile phone battle. It’s worth 200 billion euros. It’s going to be a trillion dollar company. You know they’re all these crazy parts and the idea that Nokia as the most powerful, strong mobile phone in common globally would end up. I mean, I don’t know what it’s worth to know right now, but maybe five billion.

Dr James: 1:26:05

It’s nothing. Is it compared to what it was?

Andrew: 1:26:08

It had a mobile infrastructure business and last time I looked at it it was worth about four billion euros. So it was just making mobile towers for Apple and Samsung to run there. You know, and I look, I’ve read a lot about Bitcoin. I’ve read a lot about the fact that you know the way it works. It’s so intractable. The proof of concept, the distribution that all that good stuff is why it is the big bellwether blue chip that could, you know, have longevity and stuff. But I heard all the same arguments about Nokia that it was just unimpeachable, never going to Apple come. It’s very rarely the first big dog that comes along in a new sector, whether that’s mobile phones in 98, 99 or crypto today that ends up, 20 years later, being still the one you know.

Dr James: 1:26:55

Do you want to hear the spaces argument against that? The spaces argument would be that Bitcoin and Ethereum are effectively ETFs of the space. Okay, so it’s the equivalent of buying maybe the S&P 500 or the Fitsie or something like that, because it’s an index of all the cryptos. But again, you and I can say whatever, I can say all I like and you can say all I like. Basically, no one knows. Okay, basically, no one knows. That is the point.

Andrew: 1:27:24

Yeah, and look, I don’t know that the biotech companies I mentioned earlier. I could kill cancer and go up on the next right I mean or 10 or whatever but but I have a much better probability of getting that right, as somebody used to spend six and a half years working biotech, than I do about getting crypto right now.

Dr James: 1:27:42

Totally.

Andrew: 1:27:43

And I think, but to by extension, I think that most people, whether they’re 25, 30, 35, 40, whatever you know a gainfully employed in a job that’s quite demanding and takes their time, have got a better. If they deploy their, their hours of time into that job and career progression, the likely ROI for them personally in their life is higher than deploying that time into learning about what, trying to figure out what Bitcoin and crypto and ether will do. That’s my genuine view for most people. And the other thing is, particularly when I see, I see T, you know one of the ladies who works for the Spanish France has sons 13 and he and he asked if he could invest in Bitcoin the other day. He doesn’t know what an Icer is now. That now that is to me that is really worrying Right, and that is that’s really prevalent right now is that kids on TikTok, you know millennials, people at uni, whatever. Because the other thing is any speculative, incredibly volatile assets, like if you’ve only got 5,000 quid of savings, there’s no way you should be anywhere near it, but you like wait until you’re 40 and you’ve got 100,000. You know, I mean, and I know that, I know you were an early adopter and I know that a lot of people, you know there are lots of people in the crypto space who did gain and have made hundreds of times their money. So they maybe put five grand in another 200 grand or whatever, and that’s, that’s great. But you know that 200 grand, I mean it may or might worth well over as over a million in PCC and ether. And you know, two weeks ago, you know now it’s 600 grand, what like? And what happened? Phyllis? Sort of psychologically, I would hate to have to think well, I’ve got on down 400 grand in the last three weeks. Now is it going to get? Am I going to be down another 400 grand in the month ahead? What would be back up for you? I don’t know and I don’t want my wealth. I don’t want to have to sit there on a Sunday morning Reading emails and looking at charts and cheese. Is it going to do that? Is it going to do that? I’ve got no interest. I don’t need to. I really, really don’t need to. Well, ultimately, what is the point of all this investment stuff? Right, it, as I said right at the beginning of the call, it is to get to a point in your life where you can live on your capital, not on your income. I mean then, if you like, to my point about my 90 year old stock broker friend. Lots of people don’t want to do. People who love their job might want to carry on earning income, but it’s certainly to just to use financial products to help you become wealthy and have an easier life and be able to afford things you like and look after your kids and depend on whatever else. In that endeavor, there are loads and loads and loads and loads of really good quality, regulated assets with which I can achieve that, and whereas I just think crypto is, you know it could go to zero. I mean, if I know it’s distributed and you can’t, but if you can’t distribute the person, if it is as illegal to go through the row with a USB stick with crypto on it as it is to go through with three grams of cocaine in your pocket, that’s not going to be very good for the price of Bitcoin Right or and or any other. You know, if an American central banks the world over this, the three countries that have tried to replace the US dollar with gold in the last 20 years. Do you know what they are?

Dr James: 1:31:07

No, I’d love to hear though.

Andrew: 1:31:09

Iraq, Iran and Libya Okay, the three countries whose you know political leadership is mad enough to try and take on the American you know what’s called the Pax de la Rue, and basically American hedge on the dollar global currency system. If Americans are disproportionately wealthy because everybody used the dollar, it enables them to do stuff that nobody else can do and take more than their fair share of the world’s economic output. Right? What happens to those three countries? Because they say, well, screw you, America, we’re going to trade our world in a gold backed dean. On now, how quickly did the tanks roll in, Right?

Dr James: 1:31:45

Now Bitcoin. That’s crazy. I didn’t know that. I had no idea.

Andrew: 1:31:50

I don’t think a lot when most crypto is staying, with our audience being asked about it. Right, you know, I get I. There are plenty of counter-attacks to what I’m saying. It’s really interesting, you know, it’s a wonderful technology like that to get rid of an intermediary and have proof embedded into the, into the blockchart, all that good stuff, but, and its distributors and stuff, but the end of the day, if it starts to threaten America’s ability to protect power globally. Now there’s a great I forget the name. There’s a really good Bitcoin commentator. It’s like a Turkish name. He’s a British guy based in America. He’s quite prolific. No doubt you’ll come up, ron Paul, somebody Paul or not Ron Paul, but anyway, he made a really good point, which the counter argument to my argument. So, okay, fine, but Bitcoin could easily be half a million dollars before it’s banned, and actually in the last two years he’s been right, you know, it’s come from 3000 to 60,000. So you know my argument, my argument that maybe one day America wakes up and makes it illegal to carry to use crypto on pain of seven years in prison. Right, and so did the EU, and so did China, and so did Japan. And then, well, what happens then? That argument has been valid for several years and in that time the price has gone from $3,000 to $60,000 and obviously now back down to 37,000 or whatever it is. But, but I but that’s a very, very dangerous game of Russian roulette to me with my hard earned capital, like anyway, I don’t know. The overall conclusion, to go back to your original question, is I would certainly consider it for a small amount of my net worth at some point when my net worth is bigger, and my net worth at the moment, the speculative, aggressive bit of my net worth at the moment, is all going to be going into biotech. Because I know these companies inside out, I think I have a pretty good handle on that space. I think companies that are going to cure cancer or dementia or have robots replace nurses in elderly patient care, and there’s so much incredible stuff happening in biotech. I think that is fundamentally more valuable than an untested, untried new type of investment that the government’s all over the world might make illegal in the three years time.

Dr James: 1:34:08

Yeah, I won’t disagree with anything that you said. I won’t. I think we can both agree, andrew, that perhaps the number of people who get into crypto don’t fully realise what they’re getting into and maybe it would be helpful if they had more of an understanding of what that entails and also a better understanding of their circumstances, conventional financial instruments and how that reflects in their investing not only generally but also in the crypto space. Does that sound reasonable?

Andrew: 1:34:36

That is absolutely, and you know, and there are good guys. I mean, the trouble is in an unregulated space where anybody can say anything they want, there are lots of bad actors, right, and it’s hard to disaggregate the good actors. But you know that’s your battle to fight and I wish you the best of luck. One other thing I wanted to say, though, before we move off the topic, because I’ve ranted about it and I didn’t mean to come across this, but you know it is fascinating. The other thing I was going to say to you is some of the very smartest and most successful people I know, including my best man you know who was my best man at all? My wife and I got married who has a very, very high profile job and is a super popular, you know, are huge bulls of crypto, and can they think I’m an idiot? And then, frankly, they are smarter than me and it was like but it comes back to the opportunity cost argument. For me personally, it’s like, you know, for me personally, I have very clear plan about what I want to achieve and what I need and what I can use, which vehicles I can use to that. I don’t need crypto, but you know, I just want to say that some of my very smartest friends have really drunk the Kool-Aid and see the vision and think it’s going to be totally transformational for the world and all that stuff. So you know I’m probably full of nonsense.

Dr James: 1:35:50

But that’s the part I love about investing is there is no one shoe that fits. And to pull you back to Van Thaub’s book as well we were just talking about it. There’s a lot of things. If anybody is trading and hasn’t read that book, please read that book. I’m going to hold it up to the screen now for anybody is listening to the audio version of this. It’s called trade your way to financial freedom and by it’s by a man called Kvan Thaub, and I quoted a lot. I quoted a lot in my trading. It’s not the only trading book I’ve ever read, but it’s definitely probably the best.

Andrew: 1:36:21

It’s one of the real, it’s like one of the foundational texts of you know, if you want to spend time on trading, you definitely need to read that.

Dr James: 1:36:28

It’s seminal, honestly, and the way the guy the guy makes so many interesting points in it. He makes the point that trading is 100% psychology. Okay, because if you don’t have your psychology down, it doesn’t matter what system you use, you’ll never be able to trade it effectively. And this other point that he makes that really sticks with me is that there is no, there is no holy grail in investing. This is the exact quote there is no holy grail in investing. There is just your holy grail and you need to find what that is. I love that.

Andrew: 1:36:58

By the way, have you read Way of the Turtle as well?

Dr James: 1:37:01

I haven’t, but it’s on my to read list. I recently read well, not so recently, maybe about four or five months ago psychology of money.

Andrew: 1:37:09

Yeah, so I was on a call with him Three Wednesdays.

Dr James: 1:37:12

No way.

Andrew: 1:37:13

Morgan Housel yeah, so I am. It was this Irish. I was doing an interview for a big Irish investment thing and the two guest speakers were me and Morgan Housel and I was like bloody hell, yeah, he sold. He sold 300,000 copies. Now, in fact, at two o’clock this afternoon, I’ve got a call with his publisher.

Dr James: 1:37:32

Exciting Wow.

Andrew: 1:37:34

To talk about my next book. So with that, with the same publishing house. Don’t tell my current publisher that yes.

Dr James: 1:37:40

I don’t think anyone will listen to this podcast, so we should be okay.

Andrew: 1:37:43

I’m allowed to go shopping, but it’s an exploratory story. But no, I have also. That is. You’re exactly right. It’s that point about how important you are and your, you know your, your ideas about money and that is a malleable thing, like. One of the one of the biggest problems is people have all these totally incorrect beliefs about money. The stock market is a casino Wrong. Cash is king. Wrong. Property can only ever go up and paying some. Paying rent, it’s paying somebody else’s mortgage Wrong. You know, like, like. If you’ve grown up with all these beliefs that are just come, totally simplistic, that you know parents pass on to their kids and their parents are not financially literate, like do this, do that, and they’re just fundamentally unhelpful, wrong things, then the one of the most important things to do in order to succeed in investment is to change those incorrect things by educating yourself. And you know I flatten myself to say hopefully my book doesn’t element that.

Dr James: 1:38:39

Educate yourself, everyone. The books are out there, the knowledge is out there. If anybody needs some recommendations on books, you know where I am on Facebook, Andrew. We’re coming towards the end of this podcast and I I wanted to ask if there’s there will naturally be some people listening to this who have yet to begin their investment journey. Do you have any words of encouragement that you’d like to offer them to begin?

Andrew: 1:39:04

Absolutely, I think, the most important thing. So we alluded to earlier, like my idea of ignoring the news right, every week, almost without fail, I’ll get at least one email from somebody saying I’ve read your book, I really loved your book. Thanks so much for it. The thing about investing my wife and I just wanted to get in touch because we’re wondering whether or not now is the right time to start investing. Because of Brexit, trump, syria, libya, coronavirus you know, boris Johnson, there’s always a reason to be scared of investment and to not invest, and my answer to them and I’ve written this up in some of my opinion pieces is the right time to invest is always now, Okay, and every month for the rest of your life, as long as you’ve learned enough about how to do that in a sensible way, like, what are the main things and what. Like, waiting until some sort of time when you know there won’t be Brexit or there won’t be coronavirus or there won’t be. There is never a time like that, because, I said earlier, the press spend 99% of their life, of their time, focusing on the 0.001% of bad things that are happening in the world, right? So we all have this completely fear-based, incorrect understanding of investment. So my enemies starting on their investment journey should sort out an ISA, should pay at least 10% of their whatever they can save, whatever they earn each month, into a sensible mix of investments. And I’d like to think that you know, that’s the theory and that’s the practice, right?

Dr James: 1:40:36

And just to repeat, I mean, if I may do a bit of a plug, yeah, no, I actually wanted to ask you about your new book, so I can see you holding up to the screen and for anybody who’s listening, would you be able to tell us the title and a little bit more about?

Andrew: 1:40:47

it. It’s called Live Unless Invest the Rest and what is actually? We call it a workbook. So I actually had to pay a lawyer a lot of money to sign off on that book before we published it, because it’s quite prescriptive and it talks about our funds, for example. So you’ve got to be very careful about what you can and can’t say with stuff like that. You have an investment fund and it all has to be disclaimed and hopefully I think anybody who reads it will see that it’s quite fair about the merits of our fund, that it’s only appropriate for certain amounts of your money and certain people and stuff. But basically it’s that 100 minus your age idea. It’s really the nuts and bolts of how to implement a sensible, big picture, long term approach to investment. It’s investing, it’s not trading. And I just want to say our Facebook group is a five or a month. You can join through our website and everybody who joins the Facebook group gets that for free in audio and audio book and ebook versions, and you can join the thing, pay a fiver, get it for free and then leave if you want to, if you don’t like it, or it’s available on Amazon along with the other ones. But I find myself thinking that if you get through both of the books you should be like 80 to 90% of the way to being able to confidently or maybe more of being able to like sap an icer and think about your pension and just get stuff started and I really prudent, long run, boring, tortoise kind of approach to investment.

Dr James: 1:42:19

Thank you so much, andrew, and thanks as well for being so generous with your time, because we’ve been on this call about two and a half hours, and what I was going to propose? I was going to propose that we split this into two podcasts, actually, because I think two hours is asking quite a lot of anybody to sit through our rambling, so that might be quite nice. So what I will do? Everyone, you’ll be listening to the second part of the podcast. This will be the conclusion that you’re listening to now, because this will, of course, be the second bit. Andrew has been very generous with his time today. I’m so grateful that he’s managed to squeeze us into his day, because I’m sure he’s an incredibly busy person. What was your fun? What were replying to people on Facebook, all of those things. So thank you so so much, andrew. If anybody who is listening to this is not on my Facebook group the Facebook group that spawned this podcast feel free to search it on Facebook. It’s for dentists who are wanting to raise their financial literacy and gain a practical knowledge about how they might invest sensibly emphasis on sensibly okay so that they can build a long-term money pot and retire and live financial freedom and all of those things that we’ve taught, that we’re conventionally told that maybe out of our reach. They’re totally within our reach and that is possible to do. You just need to write knowledge to do it. The Facebook group’s name is Dentists who Invest Community Group for Dentists who Enjoy Trading. I look forward to seeing you on there if you find this podcast of interest today, andrew. Thank you so much once again and thank you for coming on the show.

Andrew: 1:43:48

You’ve really enjoyed it. Speak to you soon.