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PBD Podcast Episode 217. In this episode, Patrick Bet-David is joined by David Rubenstein, Matt Sapaula and Tom Ellsworth.
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Patrick Bet-David is the founder and CEO of Valuetainment Media. He is the author of the #1 Wall Street Journal bestseller Your Next Five Moves (Simon & Schuster) and a father of 2 boys and 2 girls. He currently resides in Ft. Lauderdale, Florida.
0:00 - Start
3:03- David Rubenstein explains how he got successful
8:21 - David Rubenstein on why raising children is so hard
19:49 - David Rubenstein on the paradigm shifts of life
27:30 - Is it ethical to support political parties with money?
34:59 - Dave Rubenstein on the recession
40:46 - Why Americans lost trust in the government & the media
1:03:27 - America is expecting a worsening economy in 2023
1:08:09 - David Rubenstein on how to invest
1:10:36 - David Rubenstein on how to lead a successful company
1:15:01 - David Rubenstein critizising Elon Musk
1:18:58 - David Rubenstein praises Tim Cook
1:21:06 - David Rubenstein on his top 5 books
1:26:40 - David Rubenstein on who could be a great president
1:32:06 - Can the USA pay back its debt?
Did you ever think you would make your way on support like a check sweet victory?
I know this life's meant for me.
Why would you bet on Goliath when we got pet taved?
Value payment, giving values contagious.
This world of entrepreneurs, we can't no value that hated.
How do you run, homie?
Look what I become.
I'm the one.
Okay, so today's outcome of the podcast is to help you become a better investor and hopefully become wealthier because the guest that we have today is super qualified to do that.
It's a guest I've been looking forward to for a while.
He ran, he runs Carlisle Group.
He is a billionaire.
I was telling him earlier, if I read your entire bio, it's going to take me five minutes to read through it.
They manage, Carlisle now manages roughly $400 billion from 29 states across five different continents.
He's the chairman of the board of the John F. Kennedy Center for the Performing Arts, the Council on Foreign Relations, the National Gallery of Art.
He sat as the chairman of the board for Duke University, Smithsonian.
I mean, I can keep going on and on and on.
I told him prior to getting started is he's one of the best interviewers I know.
When you listen to him interview, folks like Bill Gates, Larry Fink, Schwartzman, I want to say one of them is Bezos, Bill Clinton, President Clinton, and President Bush.
I can't go on and on and on with the amount of people that you've interviewed.
You have a very unique, funny, creative, you know, you have a sense of humor style of interview, and then you push back in a very unique way and you let them do their part.
But it's an honor to have you on the podcast today.
Well, I'm honored to be here.
Thank you for having me.
Yes, and I had a chance to read your book, How to Invest.
I thought it was great.
Obviously, it's a lot of the interviews that you did, but I told, I just came out with a video yesterday, top five books you should read during the holiday season.
One of them was How to Invest.
You're going to get to heaven for saying that.
Thank God because of all the other reasons why I wouldn't be able to go, but it's good to have you on.
We've got a lot of topics I want to go through.
Obviously, some of it is your success story, how you became who you became, because that's inspirational for a lot of people to learn about.
But then also, we got topics with today's economy, inflation, you know, whether it's FTX.
I forgot to even say you interviewed Sam Bankman-Fried a few months ago, three months ago.
It's very interesting, him telling you, I got three, 11 text messages on my phone.
Half of them would be people asking me for money.
Just very casually, he says that to you in the interview.
But we got a lot of things to talk about.
I was with David Solomon two weeks ago in Miami at dinner, and we talked about unemployment.
I think the way you're explaining unemployment is slightly different than the way they see it.
And then I talked to my guys from Morgan Stanley, Dean Witter.
They have a different position.
Bloomberg has a different position.
B of A has a different position.
It'll be interesting to see what you think is going to be happening.
ESG and some other topics we'll get into as well.
But I know your story, but some of the audience may not know your story.
Prior to you becoming who you are today, tell us a little bit about how you came about becoming who you are today.
I'm an only child born in Baltimore.
My parents did not graduate from college or high school.
My father worked in the post office and made maybe $10,000 a year.
When they retired, he retired at the age of 55 and moved to a suburb of Baltimore called West Palm Beach, Florida.
And, you know, I grew up going to, you know, public schools.
I did get a scholarship to go to Duke University, and I got a scholarship to go to the University of Chicago.
I did serve as chairman of the board of Duke University for a while, and now I'm chair of the University of Chicago Board.
And I got very lucky in my business career.
I started Carlisle when I was 37.
It became one of the larger private equity firms in the world.
And now I committed to giving away all my money.
I was an original signer of the Giving Pledge, and I've made large gifts to lots of different places around the country.
And I have three children.
They are all MBAs.
They're all in private equity, pursuing what I call mankind's highest calling.
And they're doing okay.
And so I think they're safely launched, and they don't need me to give them billions of dollars to be successful.
David, who were you in high school?
If we're in 10th grade, who were you in high school?
I was a nerdy little kid.
If you asked my high school class who would be the most successful person in class, most people wouldn't know I was in the class.
It was a large public high school, 1,500 people in my class.
In your class?
In my class.
So it was big.
We had one guidance counselor for 1,500 people.
It was, I would say, a big public high school, melting pot public high school.
But I skipped the year of junior high school.
So I was only 16 when I graduated high school.
I was only 14 when I entered it.
So I was probably young.
My voice probably hadn't changed very much.
And I was not a great athlete.
I wasn't a great scholar.
I wasn't a great anything.
So the same was true in law school and in college.
I wasn't great at anything.
I got lucky later in life.
You know, I've determined in parts of life, if you divide life into thirds, the first third, you often find the people are the superstars, the Rhodes scholars, the Supreme Court clerks, the people that are the student body presidents.
Sometimes they make it later on in life, but mostly they don't.
And then the people in the second third and third third, they're the ones who kept working hard like the tortoise versus the hare, and they passed everybody else.
So think about your high school class.
Who was a superstar in that class?
The person you said might be president of the United States.
He or she may not be that famous now.
Of the people who became presidents of the United States in the last hundred years, only one of them was probably seen as a good student or a star at that time.
That was probably Bill Clinton.
He was a pretty good student and was a later became a Rhodes Scholar.
Most of the people who become president of the United States are not people that were that famous or that well-known.
Our current president, very nice person.
I know him quite well.
But, you know, he was a football player in high school, not considered to be likely president of the United States.
His predecessor, Donald Trump, probably wasn't thought to be potential president of the United States when he was younger and so on.
So it's just life evolves that way.
And you can't tell who's going to becoming the next president of the United States just by looking at their resumes when they were in high school.
You know, I don't know your background that well, but were you a superstar in high school?
Now, you're very well known.
I was crushing it.
I had a 1.8 GPA.
Literally, I had a 1.8 GPA.
I failed biology and I was good in math.
That was it.
All right.
So now you're very well known.
You're prominent and so forth.
In your high school class, who would have predicted that you would become this successful?
Zero.
Right.
I went to the Army right after high school.
Well, I didn't go in the Army.
My father was in the Marines.
I didn't go in.
I was too skinny.
I didn't think I'd pass the physical.
Nice.
Father was a devil dog.
Were you a superstar in high school?
I was not 2.2 GPA.
So over here, commonality, 1.8, 2.2 GPA, no college degree behind the menu.
2.
You guys are 4.0 between the two of you.
That's correct.
I love your addition.
All right.
It's Maria.
Marine Corps math.
There you go.
So, David, so you have three kids, but you were the only child.
And then your kids went to private equity, but your dad was in the postal service and your mom was a homemaker.
So what was the advantages of being a single child?
Was it disadvantages to make you want to have three kids?
Because you didn't have only one kid.
When you were an only child, at times you might say, well, it's like, wouldn't it be great to have a sibling?
But most of my friends who have siblings were fighting with them all the time.
And now I notice that most of my friends who have siblings probably don't spend that much time with them as adults.
So there's pluses and minus like everything in life.
I don't regret it.
If you look back and regret things that happened in your life, you'll be very miserable.
The hardest thing in life to do is to be happy.
That's the most elusive thing in life, achieving personal happiness.
And I'm pretty happy.
I got lucky in life, and I'm reasonably happy with where I am now.
I wish I was younger looking.
I wish I didn't have all this gray hair.
I wish I could lose more weight.
I wish I was in greater shape.
But generally, I'm reasonably happy.
And if you're Jewish, that's hard to do.
So I'm reasonably happy.
But, you know, I recognize that happiness is difficult to achieve.
And many people in life go through life not being very happy.
They're sad that they're not wealthier or handsomer or whatever it is, and they never achieve personal happiness.
You have to accept where you are and try to make the best of it within reason.
You can obviously try to do better.
But, you know, and having children, you have children, I assume.
I do four of them.
Okay, so I have three.
Your children are much younger, obviously.
They're 10, 9, 6, and 17 months.
Okay.
So your young children, right now they're not fully formed.
You can't tell whether they're going to be superstar athletes or whatever.
And right now you have them under your control, more or less.
When they get to be teenagers, it's a little more challenging.
When they're young adults, you know, they may call you back.
They may not call you back.
Raising children is the most difficult thing to do in life.
Interesting.
Wow.
More than marriage, tougher than marriage?
Yes, because you're dealing with more than one person typically.
You're dealing with three or four different children, or if you have four children.
And it's very difficult.
Also, marriage is complicated, but children is the hardest thing to do is raising children who are happy and successful.
And that's very hard to do.
Now, when you're wealthy and reasonably prosperous, it's even harder.
Because I had no money growing up, and I realized if I'm going to get anywhere, I got to work hard.
If you have money, the tendency is to give your kids money, make it easy for them.
And in the end, you're probably hurting them.
So it's not easy to raise kids when you have a lot of money or you're promoting or you're successful.
Very difficult to do that, I think.
So there's a lot of context, questions right there.
So one, I've heard a lot of different formulas about happiness.
What's yours?
And two, how do you do it with the kids when you do have money?
At what point is it important to manage expectations with them?
Well, with my children, they're well educated.
They went to Harvard, Stanford, and Duke and so forth.
So they got a good education.
But they, you know, they all had challenges.
Every child has challenges, no perfect child.
So you always have challenges, and a parent has to figure out how to deal with health challenges or whatever they might be.
I would say, if I said to my children, I'm giving you each a billion dollars, and they got a billion dollars, would they make them a better person?
I don't know.
Very rarely do you inherit a billion dollars and all of a sudden you win a Nobel Peace Prize or something like that.
People that change the world often come from blue-collar backgrounds or middle-class backgrounds.
The people that change the world and the ones you really want to admire are people that really came from backgrounds probably like yours and mine.
So give me the formula for happiness.
Well, my formula for happiness is basically, of course, being reasonably healthy.
That's good because you don't want to have health problems.
But basically, having a relationship with other people that you find satisfying, particularly your children.
Secondly, it's giving back to other people.
Generally, when people help other people, they feel better about themselves.
People who don't help anybody else probably don't feel that great about themselves.
There are many people who are very wealthy, extremely wealthy.
They don't give away very much, and I don't think they're very happy people.
Generally, giving away money or your time, your time is more valuable than your money.
You can make more money.
You can't make more time.
I think people that do that feel happier about themselves.
And as a general rule of thumb, I encourage people to do philanthropic things, which I include meaning giving your time and your volunteering things, not just money.
People that are isolated, that sit in their house and just count their money and build big houses and count how big their boat is, I'm not sure they're that happy.
The most tortured souls I know are extremely wealthy people.
The happiest people I know are often people who have no money.
Now, that doesn't mean you don't want to have any money, but you have to make sure you understand what money is all about.
It's designed to make you, I think, have a better life, but you're going to have a better life if you help other people.
Now, I tell people all the time when I'm making philanthropic pitches, when you're trying to give away, when you give away money and give away time, help other people, you'll feel happier about yourself.
Happier people live longer.
Grumpy people don't live as long.
Also, there's a special place in heaven reserved for people that do this.
Now, people laugh when I say that, but I say, why would you want to take a chance and I'm wrong?
I could be right.
You don't know.
You sound like a pastor saying that.
That's the pastor's clothes.
Right.
So, you know, in life, as you get older, I'm obviously older than you.
You know, what you do worry about as you get older is your health because we all know that people don't have the same lifespan.
When I was younger, I used to ask my parents, why do you read the obituary pages?
And they say, well, I want to see who I knew that died.
I read the obituary pages now because my friends are dying.
People younger than me are dying.
I'm saying, how come I'm lucky that I'm not dead and my friends are gone in some cases?
So, you know, when you read the obituary pages and you see somebody 45, 55, 65 dying, what did they do wrong?
How did they have such bad fortune?
So, you know, every day is a blessing in a sense that you're trying to do something useful with your life.
And hopefully, you have a long time to go to make your kids appreciate what you've built.
But in the end, raising four children is not easy.
Yeah, I got some questions for you because I'm wondering, I want to go to the sponsor, but I'm wondering if you think it's easier to, if we lived in a different country where you can have four wives or four kids, which one would be easier?
That's a technical question to ask as a Middle Eastern man here.
Secondly, I've only been 44 once, and I want to know what it's like to go into 50s, 60s, 70s, wealth creation, compounding, all that stuff.
But let me first go to the sponsor.
You can think about some of those questions because you said raising kids is harder than marriage.
I actually want to know a little bit more about that.
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Okay, so let's go back into it.
You said marriage is easier than kids.
Okay.
For me, I'm going to make it clear.
Marriage, half the people that get married are divorced.
So it obviously isn't that easy.
I don't want to make it sound like it's easy.
Yeah.
But I guess the question I want to ask is the following.
Did your wife help you?
Like, did you and your wife build a business together?
Or was it always separate?
No, it was a business.
Okay.
But people who build business with their partner, their spouse, I think that can be done.
But sometimes when you're working together with somebody 24 hours a day, it's a little challenging because you have, you know, there's always tensions.
And sometimes I've noticed that husband-wife businesses don't work as well.
Okay, so for you, you've seen it not work if they're working together, but you've also seen it not work if it's separate.
Because to me, the way I would see it is pushback and say, no, I don't agree with you.
Is your wife working in this business?
The insurance business, we did everything together.
She's got an office upstairs.
And first time we shared an office together, she said, babe, we can't be in the same office.
You're too loud.
So we put, we literally had our office complete opposite ends.
And then I saw a lot of my friends who made money and they built the business separately.
It's as if the more time was going by, interest was, you know, separating and there were no running for the same cause except for the kids.
The only thing that was in common was kids.
And then eventually it went from being a wife to being a roommate.
That's what I saw a lot of times with people who were doing two different businesses.
Now, you have more wisdom than I do.
That's why I'm asking.
You have more gray hair.
You don't have any gray hair.
I have some of it in my wife.
I was saying well, Jimmy Carter, for whom I worked in the White House, he's been married 75 years.
The only time he came close to getting divorced was when he and his wife agreed to write a book together.
They found out they couldn't do it.
They ultimately gave the publisher the money back and they didn't do it, or at least to write the book together.
So that was the only time he said he ever got close to getting divorced.
So, you know, working together with a partner and a spouse can be wonderful at times when things work out.
But when there are problems, who gets blamed?
And who, you know, I don't want to get into whether it's easier to raise children or be married.
But raising children, my point is, is very difficult.
And you've got four children.
You're going to be with them, their father, their whole life.
And I ask people, when do you stop worrying about your children?
I think when they turn 60 or 70, you probably stop worrying about them.
But the rest of your life, every time you get a call late at night, from a child, you're going to wonder what went wrong.
And they're out later than you want them to be out.
What are they going to do?
When they're one and two and three years old, they look angelic.
When they're 15 and 16 and 17 and they're trying to do something you don't want to do, not so angelic.
David, why do so many billionaires marriages not end up working out?
I talked to one of my pastors.
He says, look, I just want to tell you this.
I don't know what it is, but when you become a billionaire, things change.
Kids change.
Not kids change.
Relationships change.
Family looks at you differently.
Friends look at you differently.
You have to be kind of careful on how to maneuver through those things when you're making that kind of money.
Is it the fact that more billionaires are getting divorces, or is it the fact that billionaires are more known and people know them?
And we notice more when they get divorces than the average person gets divorced.
It's the latter.
Actually, there's a higher divorce rate among people who are blue-collar workers.
Really?
A higher divorce rate.
Very interesting.
For a higher divorce rate.
Wow.
They have more challenges as well.
But billionaires, when they make a lot of money, how do you make a lot of money?
It's not just sitting around.
You're tough.
You're driven.
And when you take those qualities and you bring it to your marriage, it's a little more challenging.
You say to your wife, look, I'm a brilliant person.
I made a billion dollars.
What did you contribute today to the marriage?
And, you know, that can tend to be offsetting.
Sometimes there are billionaires that have reasonably good marriages, my observation.
But as we've known, some of the wealthiest men in our country have recently gotten divorced.
So it's not that easy to be married when you're that rich.
Yeah, I'm sure, listen, marriage is already hard, later on adding all the other components to it.
But, you know, maybe there's an element, and again, I don't know, where you go outside where, you know, the whole saying where everybody's, oh my God, it's this.
Look who it is.
Oh, my goodness.
Oh, my God.
Can I believe it?
And you come home, hey, babe, can you take out the trash?
You know what I'm saying?
Like, do you know who I am?
Like, Dean?
Well, there is that element.
And, you know, for example, when you're in your office, you're treated like a god.
Everybody works for you.
When you come home, you're not a god.
You got to go pick out, you know, take out the garbage or deal with the kids, change the diaper, whatever it might be.
You know, people say, I don't have to do this.
I'm a billionaire.
I'm a multi-billionaire.
But sometimes it works, sometimes it doesn't.
Question, another question here before we go into the topics, and then we'll just do a lot of current events.
I'm trying to learn as much from you as possible.
So the only age, this is the first time I've been 44 years old.
I was kind of telling you this earlier.
So, you know, what's the difference like for you?
I can tell the difference of what happened from the 20s to 30s to 40s.
That's what I can talk, speak on.
Like in my teens, in the Army, energy, going, eating pizza, you don't worry about it.
Nothing happens.
I can eat two large pizzas in a night.
Next day, I still have my six-pack.
It doesn't matter, right?
You know, energy in the 20s and then 30s, flexibility, 40s, you know, bones, back.
What do you notice?
But also, I noticed with experience of negotiation, leverage, you know, how to go into different boardrooms, how to read different personalities on the business end.
But what was the biggest difference going from 20s, 30s, 40?
Was there something that you can point to?
Well, when you're in your 20s, you think you're going to live forever and you just, you know, you can do anything you want.
But by the time you're in your 40s, your life pattern is largely set.
In other words, if you're 44 years old, you're probably going to be on a path towards success or not success.
Generally, entrepreneurs at 55 don't start new companies and they change their life.
It happens, but generally they're not.
So I read the reason I started Carlisle was I read that an entrepreneur will start his or her company between the ages of 28 and 37.
Obviously, there are Mark Zuckerbergs and Bill Gates exceptions, but 28 and 37, I read that when I was 37.
So I said, I better start something.
I'll never be an entrepreneur.
Interesting.
So you're now 44.
You're on a path towards a certain level of success.
And if you continue this path, no doubt in your 50s, you'll be even more successful.
Had you not started what you're doing now and you try to do this when you're 50, it might be harder to get started because by then you've got kids who are older you got to deal with.
You've got more financial challenges, all kinds of other things.
Now you can get this going, and you're on a path towards success.
When you hit 50, you know that most likely you've lived more than you're going to live.
And you have to look at things a little bit differently.
When you're 44, you can say, well, maybe I'll make it to 88.
So maybe I'm only halfway through.
But people have 40th birthday parties.
That's when they kind of say, I'm really moved into adulthood.
I'm really a real adult now.
I can't pretend I'm a kid anymore.
So when you're 44, you're young.
On the other hand, if you're a professional athlete at 44, you would be, you know, you'd be gone.
You're done.
I mean, how many professional athletes other than Tom Brady are there playing at any sport at the age of 44?
So while you're young looking now, if you were a professional athlete, you would be seen as too old.
Yeah, I'd be being asked to be in a head coach or assistant coach or something like that.
Hopefully, if that's what you want to do.
What to expect in 50s, 60s, 70s?
Well, as you get older and you're successful, people will treat you more with more respect, presumably, if your success continues.
Also, you have more of a responsibility to give back.
You're going to mentor people more and more.
And ultimately, you got to figure out what you're going to do with your wealth.
You can build a pyramid to how great you are.
You can buy yachts and so forth, or you can give some of it away.
And you have to figure out how do you want to use that wealth in an intelligent way and be a good role model for your children.
Any blind spots to look out for?
Any blind spots?
Be careful with this.
Be careful with that.
Be careful with this.
Hubris.
You know, when people tell you how great you are, you got to be discounting that because very few people are that great.
There are very few real geniuses that are floating out there or people that really change the world.
So, you know, I mean, you know, Darwin may have changed the world.
Einstein changed the world.
But we shouldn't think that we're going to be Darwin or Einstein just because we made a lot of money.
Got it.
Hubris.
I just read this book by Jim Collins.
How the Mighty Fault.
And what was the first step?
Was it Hubris?
Number one.
Hubris is what causes people to fall.
So compounding.
The other thing I want to talk about is compounding.
You know, when you're really working hard, you're doing your part, like, oh, my God, I'm so good.
Like front, putting so much effort on the front.
You're like, oh, first time I ever made $100,000, six-figure.
Oh, my God.
Like, this is amazing.
Will I ever make a million?
And then, you're grinding to make a million.
That's amazing.
I'm making a million bucks.
I'm in the top, you know, half a percent of America.
This is sick.
But I don't know if I'll ever get to 10.
You know, will my business ever get there?
We got to 10 million, dude, but there's no way I'm going to get to the hectic side.
When did you know, like, listen, the likelihood of me being a billionaire in the next 13 years is very high.
You're a math guy.
So far, you've done a bunch of different things.
That's math.
I said 1.8, 2.2.
You said combined.
We had 4.0.
You said 44 years old, 88, 50.
You're not thinking.
So everything in your mind, and I know you're a math guy yourself as well.
But at what point did you say, I think I'm going to be this within, because you're a numbers guy.
So I know the typical, the humble, so I never thought about being a billionaire.
That was never part of the goal.
I totally get that.
I understand that's not part of the goal.
But it is a milestone.
When did you say, at this point, if I go at this rate, we're probably going to reach that number.
Probably when I was maybe 15 years into starting Carla, I started when I was 37.
So probably when I was early 50s, I said, okay, this is going to be one of the larger private equity firms in the world.
And as an owner of it, I'll probably do well.
But I didn't obsess over it.
And when Forbes puts out these lists, then people pay attention to you.
So my children didn't really know the level of my wealth until Forbes comes out and publishes thing.
And that's true with your neighbors.
My neighbors, I'm living in the same house now for 35 years or so.
And people, they don't really know what I do that much, and maybe a little bit.
But one day they might read the Forbes and say, hey, this guy is worth X billions of dollars.
He's living on taking out his garbage less like us.
But in the end, it's like anything in life.
When you pass it through, you go into the next thing.
If you obsess over being it, now there are a couple of people who obsess over being on that list.
I won't mention them, but there are people who have sued Forbes for not being on the list or not being high enough on the list.
But if you obsess over your numbers, it's a mistake.
You can't confuse your net worth with your self-worth.
If you basically just say, I'm worth X dollars and therefore I'm really great, that's a mistake.
Don't worry about your net worth.
Worry about what you're really doing with your life.
That's much more important.
Very interesting.
And yeah, I've heard the stories about people suing Forbes for either being too low or too high or not on the list, not too high.
Not on the list.
But interesting.
Let me see if I had any other thing here.
No, aside from this, I think we can get into current events.
So you said geniuses.
You mentioned Darwin and you mentioned Einstein.
Who would you say is a genius today?
Like if you were to give a couple names, who would you put in that genius level today?
Well, people that are well-known, I would say, I'd say Elon Musk is a very smart person.
I've interviewed him.
You know, he obviously, like all really brilliant people has eccentricities.
Nobody, I mean, Einstein was eccentric.
He didn't wear socks ever.
He couldn't comb his hair ever.
He got lost walking to home.
Brilliant people often are eccentric in some ways.
Now, some people say that everybody's eccentric.
It's just that the brilliant people or the famous people are the ones that get away with it.
But I think Elon Musk is a really, really smart person.
I think Bill Gates is very, very smart.
Mark Zuckerberg is very, very smart.
But the word genius is overused.
How many real geniuses are there?
And what does it really mean to be a genius?
So there's some math professors somewhere that are probably geniuses, but I don't really know them that well.
There are very few people that you would say, when they walk in the room, you say, this is Albert Einstein updated.
Very few people like that.
So you put Musk.
It seems like there's only one name.
Well, Musk is very, very smart and maybe a genius, but how do you measure genius?
I think Bill Gates, what he did, he built a great company and he's done great things in philanthropy.
Is he a genius?
I don't know.
How do you measure genius?
Clearly, Mark Zuckerberg, I think, built a great company.
That's obviously had its challenges lately.
The Google guys that built Google are really, really smart people.
But what does it really mean to be a genius?
I mean, it's hard to know.
Interesting to say that with Elon Musk.
We're going to get into Elon Musk as well.
By the way, Carlisle, your clients, your clients, some of them are Republicans.
Some of them are Democrats.
Some of them are independent.
Some of them are, you know, politically, they're all over the place, right?
You're not going to just.
Maybe even more of your clients are Republican than Democrats.
Possibly.
I don't know if they are or not.
But you don't do a survey and say, so who did you vote for?
You can't do that.
That's not something that you do.
But you know where they lean.
It's like you know when they're giving money to one side of it.
Like do you know Schwartzmann where he leans?
You know where JPMorgan leans.
You know where Larry Fink leans.
You know where a lot of these guys lean.
It's not hard to kind of figure out where these guys lean.
How do you I run an insurance company?
We've licensed nearly 40,000 people.
We have, I don't know, 15,000 agents nationwide, a few hundred offices nationwide.
We just sold the company to IMG, who the money came from Silver Lake.
You know these companies.
You know these names.
So but some of the guys that you have, they're Democrats.
Some of them are Republican.
And, you know, you're spending your Thanksgiving.
I mean, the president was with you during Thanksgiving.
No, let me be honest.
I lent him the house.
I wasn't there.
I was in Florida.
But even that, like, I mean, to say, you know, Biden stays.
So if I go like, the only reason I'm saying this, this is actually a question I'm asking because a lot of people are uncomfortable about this.
So, you know, where, you know, you ask Sam Bankman-Fried, and he said, yeah, I don't know who I'm going to give the money to.
I'm going to probably give the money to both people on both sides of the aisle.
I'm going to give it to some Republicans, some Democrats.
But then some of the guys at the top, you notice they're typically on one side who they're giving the money to.
How do you manage the relationships where they say let me describe it?
Yeah, I'm curious.
I worked in the White House for President Carter.
We lost the election to Ronald Reagan.
So an election changed my future.
I thought I would stay in the White House another four years.
I decided to get out of politics and to do something different with my life.
I don't give money to any politician.
Zero.
I'm not involved.
Never.
None.
Zero.
None.
What's your philosophy for that?
I'm curious.
Well, my view is I'd like to be friendly with people in the Democratic Party and people in the Republican Party.
And I don't want people to judge me by who I made a campaign contribution to.
And also, when you're giving gigantic sums of money to people, you have to wonder, is that a really great thing for democracy?
So I don't want to criticize other people to do it.
I stay out of that.
What I try to do is bring people together in this way.
I host a lunch, a dinner for members of Congress, only members of Congress, once a month.
I bring in a great historian, and I will interview that person in front of only members of Congress.
I ask the Democrats and Republicans to sit with people from the opposite party, people from the opposite House.
Doing it for seven years.
And people love it.
And they say it's one of the most interesting things they're doing in Congress is going to this dinner because there's no press there.
They can sit and talk with people from the opposite party, which they rarely are allowed to do in today's environment in Washington, D.C.
But if I was known as a big Democrat or a big Republican, it'd be harder to do that.
I'm chairman of the Kennedy Center.
I've been chairman for 13 years.
If I was an active Democrat or active Republican, I think it'd be harder to do what I do, which is to bring Democrats and Republicans to the Kennedy Center.
The same is true with the Smithsonian.
When I was chair of the Smithsonian, I didn't want to be seen as an active Democrat or active Republican.
Some people are, but I just thought it was better for me to be able to bring people together from both sides.
So that's the way I'd look at it.
David, just out of curiosity, because the fact that you've never given money to.
Well, I say never.
I did years, many more decades ago, but not in recent 25 years.
Since you made your money, let's just say since you really made the one, you haven't given money.
Do you think if you were in charge of policies, it would be better if none of us could to find out who's the real candidate versus constantly going out to campaigning?
Because a lot of this is now about campaigning.
Who can raise the most money?
Can you do it?
As a general rule of thumb, the person who has the most money will probably win an election.
It's a general rule of thumb, not always.
And so clearly, if this was a different country, we would call it legalized bribery.
You're basically getting, you know, if somebody gives you $5 million or $10 million, what do you think that person wants for that?
They want something.
I don't know what it'll be, and I'm not saying it's necessarily illegal.
We've sanctioned it.
But somebody that's giving $5, $10, $15, $20 million, they want something, and you have to wonder whether that's a good thing.
Now, unfortunately, members of Congress spend so much of their time raising money now that they can't spend as much time as they want on the legislative matters.
40% of the time of House members is often spent raising money.
And the reason is the more money you raise, the more likely you're going to win.
And if you have money left over, you can keep it now, more or less, for political purposes the rest of your life.
Yeah, I'm not a fan of that because you owe too many favors.
It's kind of like, hey, I owe favor to this guy, to that guy.
Hey, remember that one time I gave you this?
It's like you're in debt to the people that are giving you money.
I don't know if it makes the relationship more straight up.
But be honest, I mean, look, I don't have a better system.
I don't know what better government we can have.
And as Churchill said, democracy is the worst form of government except all the others.
So our government has lots of challenges.
Our political system has lots of challenges, but I'm not seeing people leaving this country to go to another political system.
We have 50 million people in this country who are immigrants, 50 million people.
Many of them are citizens, 50 million.
How many people have leaving this country every year to go elsewhere?
Maybe a small percentage, very, very few people leave.
Because the country's got all its challenges, but still the best country in the world.
Why do you think we're confused, though?
Why do you think we're confused?
I turn on the TV sometimes as a guy that was born in Iran, lived there 10 years.
I lived two years in a refugee camp, came to the States.
And I hear so many people that were born here bitching about America.
How did Americans not be proud of being Americans?
It became cool for the last few years to hear people bitching about the country that gave them the life that it gave them.
Well, 50 million people wouldn't have immigrated here if it was such a terrible place.
I think no other country in the world is even close.
The only other country even close in terms of immigrants is Germany, about 10 to 15 million people.
But people aren't rushing to China.
People aren't rushing to go to live in Russia.
The Philippines.
People are rushing to live here.
And obviously now people are coming across the border illegally, and that's because they're so interested in coming to this country.
It's not because people aren't leaving this country to rush to Mexico, right?
That's right.
Well, it's good to hear.
By the way, how do you president is doing?
I know you've commented on Trump, on his policies, economy in the past before.
How do you think President Biden is doing, specifically economic policies?
Well, obviously inflation got out of control.
It wasn't transitory.
I think the Federal Reserve, Jay Powell, used to work at our firm.
I know him quite well.
He used to work at Carlisle.
He worked at Carlisle for seven or eight years.
He's done a very good job.
The biggest problem we had is that when COVID came, we didn't know what to do with it.
So the Trump administration, the Biden administration, put $5 trillion into the economy, which had an inflationary impact.
And the Federal Reserve came interest rates at zero.
That had inflationary impact.
We didn't realize how serious it was going to be.
But now we're playing catch up.
I think the inflation is coming down.
The economy is in reasonable shape.
And as the Biden, I think he's done a pretty good job given the circumstance he inherited.
Got it.
Okay.
So let's go into some topics here.
Let's go into some topics here.
First topic is insider.
This is just a few days ago, page seven.
Billionaire David Rubenstein says a recession is coming.
Tech valuations are set to fall further.
This is what, December 13th.
Right.
Go to this year, page seven.
Let me read this article to you.
Not the whole thing, just the highlights of it.
Okay.
I suspect the Fed is determined to not make another mistake on inflation, Rubenstein said.
I think the Fed generally would say that they misread how much inflation was going to be caused by the $5 trillion injected into the economy by Congress to deal with COVID, which is what you just said, right?
And also the current quantitative easing impact as well.
Inflation was transitory, they said, but it turned out it wasn't.
Along with a recession and the rise of unemployment, Rubinstein says tech company valuations are expected to fall further on harsh economic conditions into next year.
I think some of the tech companies that have changed our lives for the better are very good, and maybe their valuations will be coming down a bit.
But I think a lot of valuations for fewer tech companies that don't have revenues, let alone earnings, probably are going to come down more than a bit.
So the question about recession next year, what's the recession going to be?
You know, the phrase everyone's using is it's going to be a soft, we're going to have a soft landing, we're going to have a soft landing.
What do you think is going to happen next year with the recession?
To remind everybody, a recession is defined many different ways, but the shorthand is two consecutive quarters where the GDP growth rate is negative.
And there are other factors beyond that.
But let's say it's two consecutive quarters.
No one really knows whether we're going to go into a recession or not.
Everybody, when we go into a recession, if we do, will come out with their memo saying, see, I told you so.
I have my memo.
It's in their files now, but they'll drag it out if actually we go into recession.
It's easy to predict a recession because if you're predicting you're not right, people aren't probably going to call you six months later and say you were wrong.
Right now, the Federal Reserve is trying to get the inflation rate down to 2 percent.
I think that's too low.
Probably 3 percent is more realistic.
But if it can get it down to 3 percent on a consistent basis, and we've had 3 percent for the last couple months, so that they can consistently get down 3 percent, I think we could avoid a recession.
But the Fed may be more worried about inflation than it is about unemployment, and therefore they may increase interest rates a little bit more than may be necessary.
And as a result, it could go into a recession, probably a temporary or a short-term recession.
That would be my view, nothing like the great recession we had in 2008, 2009.
There's no magic formula to know whether you can jack up interest rates a certain amount and it's going to produce inflation.
One of the problems we've had is typically when you increase interest rates, unemployment goes up as well, because interest rates go up, people fire people, things change.
But it's been a very big mystery to the federal government how the unemployment rate is staying so low.
And that's in part because we haven't figured out the post-COVID impact of employment.
For example, historically in this country, 66 percent of all the adult males and females are in the workforce, 66 percent.
Now it's 62 percent.
Where do those people go?
Well, older people retired after the Great Recession.
Younger people don't want these entry-level jobs.
They're not working anymore.
They went back to school.
And a lot of people just aren't working.
They just figure out they don't need to work anymore.
They made some money in COVID.
So when you don't have that many people in the workforce, the result is you've got to pay higher prices to get people to work because you need to fill these places.
So it's not like you can lay people off so easily these days.
It's just not happening.
And as a result, unemployment is not going up.
So the participation rate is really what was in there that people don't talk enough about to understand.
I mean, to get employees, if you want to get entry-level employees to work for you, how are you going to get them?
Well, you're not going to get them by minimum wage.
Minimum wage in this country legally is like $7.5 an hour.
Now, nobody's paying that because you can't get anybody to pay for it.
No way.
Nobody's paying $7.20.
And I know they're always talking about raising.
It's like if anybody paid $7.20 right now, you wouldn't have any employees.
But you said something, two things.
You said definition of recession is back-to-back quarters negative, right?
So if that's the case, were you saying that because you're trying to say we've technically been in a recession since July 1st?
Is that kind of what you were alluding to?
Or no.
No, last year, earlier this year, in the first and second quarters of this year, we had two consecutive quarters of negative growth.
It wasn't called a recession by anybody because other things were happening.
Sales growth was still going on.
Sales in a recession are going down.
Retail sales were going up.
Exports were going up.
So it was a technical recession.
And the reason it was technical is the reason the supply, the reason GDP went down is we were basically filling up our supplies from the COVID situation.
In other words, manufacturers weren't making a lot of stuff and selling a lot of stuff because they had a lot of excess supplies left over from the recession, from the COVID period of time.
So it wasn't considered a recession.
But if we go into a recession in the future, two consecutive quarters, almost certainly it will be considered a recession.
But a recession is defined by economists different ways.
I would say if we go into a recession, it will almost certainly be very brief because right now we don't have the problems we had in 2008 and 2009 where the banks are in financial trouble.
We don't have a lot of people in financial trouble right now.
I think the biggest challenge we have is that inflation is still high.
Now, it's coming down because the most recent numbers show they're coming down.
But if the Fed feels it has to increase interest rates further to get inflation down, that could produce a recession.
We just don't know.
And the Fed doesn't know.
Is Jerome Powell, like, does he have a board that he calls on?
Like, do you guys, you, Jamie, you know, Stephen, think, is there like, does he call and say, hey, guys, what do you think about this?
Here's what we're thinking about.
Because it's got to be a very tough place for him to be if he can't lean on some of the free market guys to talk to them.
Well, he does talk to them from time to time.
They go to see him.
He asks to see them.
He meets with them from time to time, sure.
But he also has incredibly good economists who work at the Fed, and they have pretty good data, and they kind of know what the economy is doing.
But nobody's perfect in this business.
And lots of times, you know, you make mistakes.
The Fed has admitted that it made a mistake on inflation earlier.
Janet Yellen said that they made a mistake.
Yeah, she did.
Have we ever been in a time, David, where the amount of things experts are getting wrong right now has been higher than today?
And the reason why I'm saying this is the following reason.
So, for example, hey, you know, if you keep printing money, gold's going to go to 5,000.
Nope.
Hey, if you keep printing money, you know, Bitcoin's going to go to 100,000.
Nope.
Hey, guys, if we keep printing money, you know, we're going to get the money to go to the poor.
Nope.
The money went to the poor and poor spending and the billionaires became richer and kind of favored them because anytime you give the money to the poor, the poor is going to spend the money and it goes into private economy.
They don't save money because they don't have the habits of saving money.
Hey, anytime we, hey, this inflation is going to be transitory.
Hey, recession is going to be soft landing.
Like the level of trust the average consumer today has in experts saying what they think is going to happen to the economy.
I saw a score the other day.
It was a very interesting score.
I don't know if you've seen this or not.
The score was the correlation between the trust the American voter has in the government in the last since since 1970, I think it was.
How influent from 74% we trusted the U.S. government is like 25% right now.
And then the score you put it right next to trust in mainstream media from where it was in 1970s to today.
David, you got to take a look at this.
It's literally identical.
Here's one of them.
This is what trust in public in a government from 58 till today, from 75% all the way down to less than 20%.
If you do the same thing with mainstream media, it's down as well.
I would say if we put it with experts today, it would be the same.
Why are experts getting so many things wrong today?
Well, first, maybe they're not experts.
But secondly, the trust in federal government has gone down from the time of the Vietnam War.
When the Vietnam War was being waged, many people lost confidence in government.
Watergate compounded that.
And then since that time, we've had a lot of government officials say a lot of things that are just not true.
And I think the Trump era also had some impact on that as well.
But also remember, in the old days when I was young, you were not even probably born, we had a situation where you had three news shows in the evening.
That's where people got their news.
CBS, NBC, and ABC.
No cable.
Newspapers are very, only a couple newspapers that were really national newspapers.
That's what you got your news from.
Now everybody's got a podcast.
Everybody's got a TV show.
Everybody's an interviewer.
Everybody watches things.
There should be a bumper sticker.
Say, hunk, if you don't have your own podcast.
Everybody's got a podcast.
Everybody's an interviewer.
So there's so much information coming into people.
You're bound to be wrong, and you're bound to disappoint people.
So I don't know that the experts are less good than they used to be, but the willingness of people to accept authority, accept the government as knowing what it's doing.
For example, take the most recent elections.
Everybody said it was going to be a red wave.
The House was going to be overwhelmingly Democrat or Republican.
And the Senate would go, even would go Republican.
People were wrong.
People were wrong.
Yeah, but then also when you were giving the stories at the time when I was in Iran and there was only three shows, you know how right now Tucker Carlson's number one at 2.7 million?
At the time, number one was 33 million.
You're right.
33 million.
Can you imagine like you're the number one guy, 33 million?
But to say the thing about podcasts, which what did Jamie Dimon say to you in an interview?
I love what he said to you.
He says, he said, David, this is the interview you did.
When did you do the interview with Jamie?
I've done several of them over the years.
The one where he talked about his relationship with Sandy, how, hey, I asked Sandy to go to lunch after a year and I sat down.
I said, let me tell you, this is where you were wrong.
Here's the areas I was wrong.
I thought it was a fascinating interview.
Yes, it was interrelated.
Five years ago.
That was in 2017 when he did the interretheum.
That's right.
And if there was an audience when you were doing that interview with him, he said something.
He said, David, we got 145 million people that are working today, give or take.
He says, only 20 million, they're working for the government.
Only 125 million are working for, what do you call it, free enterprise, free market, right?
And whatever that number is, 120, 20 or 125, 20, but the number was.
And he says, the only thing I think they get right in the government is what?
Military.
That's Jamie's words, what he said to you.
You've done many interviews.
You may not remember that, but he said that in 2017.
So for me, when I hear that, I'm like, okay, free enterprise gets things right more than the government gets things right.
They're not operators.
They don't know how to build.
You give them money, they screwed up.
You give the money to you.
I would trust giving you a billion dollars and giving anybody at the White House a billion dollars, right?
So I think the one thing that is happening, which the honking part about the podcast, I'm loving that because we thought all these years the best people on podcasts and news were the guys that we were supposed to admire.
And they were like, no, a guy that's tatted who smokes wheat and likes UFC and was on Fear Fact, a former actor who can beat up 99.9% of men in the streets, he's embarrassing everybody.
The guy's name is Joseph Rogan.
You know, this guy's kicking everyone's tail combined.
So I think that whole concept about podcast, what it did do is it got the rest of us to kind of say, listen, this Dr. Fauci thing got a lot of things wrong.
That other expert guy on finance got a lot of things.
All these people we were supposed to trust men, some of them are full of shit because there's marketing dollars beyond, and they got exposed.
And I think that made a lot of people uncomfortable because the club behind closed doors, but we were all supposed to be like, look, I understand.
We're going to kind of respect what you're doing because I know we're doing business in.
We won't say anything about it, but you owe us a favor.
Some of that stuff, I think now people are like, holy moly, these guys are exposing the rest of us.
I think it is a progress type of a direction we're going in where people can no longer be us.
I kind of like experts being held accountable.
I like it.
Well, there's no doubt that sometimes there are no right answers.
So for example, let's suppose you had been Dr. Fauci at the beginning of COVID.
What could you have said or what would you have done that would have made the world better?
We didn't have a vaccine at the beginning, so we didn't really have a lot of knowledge about what you could do.
Obviously, the masks were one thing that were done.
That's not a perfect solution.
I think the government lost a lot of trust when we didn't really solve the COVID problem as quickly as maybe we should have.
And we did a lot of million Americans died.
We could have done a better job.
And I think everybody would agree on that.
What do you think we could have done differently, though?
I mean, I know you and I are not doctors, but like, okay, let's just process that and say, what could we have done differently?
You know, never in the history of mankind have we made a vaccine faster.
It's the fastest ever.
Yeah, never have we, like, can you imagine like to tell people, I'm in the military.
We're just talking about a Marines, you know, guys.
Yeah, 60,000 soldiers and a little over 3,000 Marines kicked out and discharged with other than honorable discharge.
It's a general discharge.
For what reason?
For not taking the vaccine.
Okay.
I mean, that part, for me, it wasn't necessarily, you know, Fauci had been through the AIDS pandemic, you know, epidemic.
You know, he had gone through a lot of these things, and he saw what happened with AIDS.
He saw what happened with a lot of these other things.
The weirdest thing for me was when we went from a country of choice, like you know how progressives say pro-choice approaches, like the pro-you know, this election submit terms, you know what it came down to.
You know that.
I know that.
I mean, we read it everywhere.
Oh, it's going to be this.
It's going to be that.
It's going to be economy is bad.
No, it came down to Roe v. Wade.
And, you know, if the Republicans strategically would have done it later, some are saying McConnell intentionally forced it to happen before because he wanted Trump to get a black guy so the Republicans would realize, hey, it's us really that are running it, not Trump.
You guys got to get away from Trump.
So a little bit of strategy credit, maybe to McConnell, if it was intentional to get Roe v. Wait before, who knows?
But it was choice.
Even some people on the other side wanted the choice.
The part that made Americans a little bit uncomfortable, which was like, dude, like, listen, I'll take the vaccine.
God, I've taken 30 vaccines in my life.
Just don't force it down my throat.
Let me have the choice to take it.
I don't think there's anything else that could have been different because, you know, how long does it take to do research on a vaccine?
Wow.
You mean to tell me after nine months of you doing testing on who?
On animals, maybe?
You want to now test it on me?
And we've never done anything where we needed three.
We've always had three years of testing for vaccines.
And you want to expedite?
No, you want me to trust it 100%?
That's just a little bit uncomfortable for an American to say yes to it.
Did you take the vaccine?
I did not.
But everybody in my family did.
Meaning, my dad did.
He's 80.
My nanny did.
You know, my dad took five boosters.
He lives with me.
Did you get COVID?
Of course I got COVID.
Yeah, of course.
I got COVID.
I got the first COVID.
I got COVID-COVID.
I didn't get Delta or I didn't get...
That was the more serious one.
Yeah, I got the real COVID.
And I lost 21 pounds.
Yeah, I lost 21 pounds in four weeks.
We moved our entire office.
We had 80% of our office at one point get COVID.
It sucked.
I'm not sitting here telling you it was a, you know, euphoric experience and everybody should try it.
But I think the biggest thing is to get people to be forced to do something they didn't want to do.
I think certain situations in the military, we did it wrong.
I think New York, certain things was wrong.
I was living in L.A. for 24 years.
I left L.A. because they were trying to control every decision I was making.
I moved to Dallas.
So I left my insurance headquarters in Dallas.
I was just there yesterday.
We got back last night at 8:30, Addison Private.
Our office is in Addison.
We like Addison.
Two years ago, we moved here from Addison to Fort Lauderdale, right here, because I was watching everybody.
I'm like, dude, what is so?
The best case studies was Disneyland, Disney World, perfect case study, California, Florida, Florida 1.
The perfect case study.
All the people that were complaining in the NBA about Black Lives Matter, they chose to do playoffs in Florida.
I'm sorry, aren't you supposed to hate the state?
All the people that politically hated what DeSantis was doing in LA or New York or Chicago for Christmas, they were clubbing here in Miami.
They all came vacation in Miami.
So you watch some of this stuff and then you're like, I don't know, man.
And I don't, you know, it's made me feel very uncomfortable that they were forcing.
That's the only thing I thought was uncomfortable.
Why did you have your children get it?
No, my parents got it.
My kids didn't get the kids didn't get the vaccine.
My kids, you know, I'm a guy that went to the military.
When you go into the military first week, we took 11 shots.
They give it with air guns and all this stuff.
And if you go use it.
It's assembly line.
Assembly line, just each shoulder.
No joke.
And if you switch, it cuts you.
And our kids got the vaccines, got the vaccines.
But for me, and the reason why even some of the vaccines are a little bit, you know, the whole story with autism and how Robert De Niro was at that one.
I don't know if you've seen this interview where there was a video that was done, vaxed, and he was talking to the reporter that they removed him.
And he was upset because he didn't want to talk about it because he's got a 22-year-old son that has autism.
And he thinks it's linked to vaccine.
And, you know, Robert De Niro cannot stand Trump, but he just wanted to learn a little bit more about that.
But for us, like even that has decades of research.
We don't have decades of research on this.
For everybody to just make you feel guilty if you don't want to get a shot was a little bit uncomfortable.
Well, I don't think vaccines cause autism, but there was a report by a British doctor at one point that's since been discredited who was alleging that.
I don't think any scientists that are reputable believe that autism is caused by vaccines, in my view.
I didn't say that.
I know what I was saying.
I know.
But just to deal with that, in terms of vaccines, about a third of Americans have not been vaccinated against COVID.
So that shows you, but the same percentage is true in Europe, too.
About a third of people in Europe as well have not been vaccinated.
There's a certain percentage of people who just either don't want to be told what to do or just don't feel comfortable with it, and you're not going to change them.
But did you see the data that's coming out that some of the guys now that are vaccinated are getting sicker or they're getting COVID more often than the ones that they, and by the way, this is not a Breibart article or a Fox article.
I was vaccinated all the time that you could be vaccinated.
I did get COVID subsequent to that, but maybe it was a more model case, a modeler case.
I don't know.
So vaccines are not perfect solutions to dealing with these problems.
They can mitigate the problem, but they're not perfect.
But for example, you're vaccinated against polio.
So that one you're comfortable with because it's been tested.
They get your research.
Sure.
Yeah, they get your research.
My only thing was that.
So if for me, you know, you kind of are able to say, all right, let me see what's going on.
How much research do we have on this?
How many years?
Okay, great.
Perfect.
Then let's go do this.
Rather than like, can you guys give us some natural maybe Eastern medicine without having to put something on my body that's a different way?
Can we get some of those solutions?
Why does it have to be immediately this?
And then the average person who's a little bit skeptic is going to sit there and say, let me get this straight.
So you're sponsoring the guy that is giving you millions of dollars of sponsorship and you're saying we should take that product.
Well, why would you tell us not to take that product?
Big pharma's advertising gift.
Well, that makes sense for you to support them because if you don't, you're not going to get that $52 million or $10 million budget per year.
Okay, I get your loyalty to the money that you're getting.
It doesn't make sense for me to do the sponsorship about this company.
And afterwards, I say, by the way, they suck.
I just want to let you know this.
These guys are not good.
But they gave us money.
So here's the sponsorship.
So those are some of the levels where I think the level of trust in mainstream media went down because they stopped doing one thing.
You know why I love watching the interviews?
I have a friend of mine, very successful Armenians in LA.
Very.
And they've made very good money.
Okay.
Huh?
Oh, they made very good money.
And they will say, Pat, there's a lot of guys on YouTube.
You can name them all.
I only watch one guy.
Who's the one guy?
He's the best.
Who?
David Rubenstein.
I don't watch anybody else but David.
Tell me why.
Because David asked the questions I'm thinking about.
That's great.
So then I'm like, I know who David, but I didn't know David had a YouTube.
This is five years ago.
We're not talking about like this is when you just had starter.
You got a couple hundred thousand subs right now, but at that time you're just getting some like, let me see.
I'm like, damn, this is sick.
This guy keeps doing more interviews that he's going to have 10 million subs.
He's freaking legit.
And what other moral authority does somebody give you to be sitting on all these boards and these people you've dealt with, like you've met presidents, all of them probably, you met billionaires, probably all the Fortune 500 guys.
You probably met most of the CEOs.
Your clients, some of them are some of the most powerful people in the world that you're dining.
Your president stays at one of your places.
You've met all these guys, Jimmy Carter.
So you've worked in all these different spaces.
Fantastic.
The one thing that I got uncomfortable with was the final one.
At the beginning of COVID, I have no idea what's going on.
We're in LA.
We have a board meeting.
It's March 12th or 13.
That's the day when NHL shut down, NBA shut down, Disneyland shut.
I'm in LA with three of my kids, and I'm getting ready to take my kids to Universal Studios.
We love going to Universal Studios.
And we have a board meeting with Gabrielle Brenner and Greg Sher and Oscar Dela Hoy in L.A. I'm like, okay, cool.
I'm going to do the board meeting.
Then we're going to go to whatever, Universal Studios.
So we're staying at Beverly O's alternative, Beverly's, whatever the hotel is.
And then first person cancels.
Second person cancels.
But I'm like, what are you guys doing?
Hey, it's because of COVID.
COVID?
Yeah.
Seriously, yeah.
Let's turn on the news.
Let me read it.
Listen, babe, we got to go back because everybody's afraid right now.
Let's see what's going on.
So I go back and I go into research mode.
First thing I do, I got a podcast with a few million subscribers.
Let me call people from both sides to come and discuss this solution, vaccine, all this stuff.
At this point, I have no clue what's going on.
I got to make the right decision for my field.
I got to make the right decision for my executives or my family.
Do I take the vaccine?
Do I not take the vaccine?
You know what was one of the biggest reasons why I didn't take the vaccine?
Here's what I'll tell you.
The guys who were skeptical about not taking it, like RFK, Robert Kennedy Jr., you know who he is, and others, they were willing to debate anybody.
But when I called Dr. Paul Offit, or when I called all these other doctors, and I told him, I'll give you 10 grand.
Then I went to 20 grand.
Any charity, 50 grand, 100 grand.
They would not take the debate to meet Robert Kennedy Jr. to discuss this.
That's when I said something's off.
And then there was a guy named Dr. Mike, who's got a YouTube channel.
I think he's got, you can put him up seven or eight million subscribers.
So he calls me out and calls out an interview I did with a grown name with a lady named Dr. Judy Mikovitz, which I don't know who she is.
But I interview her because I'm interviewing all the doctors at the time.
That interview gets taken out real quick.
It gets a million views.
Gets taken down.
He's texting me and he says, yeah, absolutely.
I'll debate her.
Anytime, any day, our booker's like, he's booked, he's coming.
Three times he confirms.
All of a sudden, last minute, no, I don't want to talk to her.
Why?
I'm too busy.
Really?
While he was busy, he took 20 different interviews from other people.
We have a hard time interviewing here.
And Fauci went on his show God knows how many times, right, on his YouTube channel.
And I'm a street guy.
You know, I'm a guy that came from the streets, divorced family.
My parents got divorced twice.
I've seen drugs.
I've seen everything.
I've seen gangs.
I've been around all these different gangs.
Listen, man, anytime you don't want to face off somebody, there's a little bit of fear or concern that you got.
And who's RFK?
Like a gangster?
Is he a mobster?
Is he going to come after your family?
Shit, everybody went after his family, not your family.
Sit down with the guy.
That's when I said, I don't know what's going on.
I'm not an expert in this space.
I'm not a doctor.
I'm not a scientist.
But anytime you're not willing to sit with somebody to debate a topic like a qualified person like this or other doctors that I even invited, they lost a lot of trust with me because all these experts ever wanted to talk to was people that agreed with them.
And that made me very uncomfortable.
Well, I can understand that.
But sometimes people don't want to debate people because they don't want to give them an audience that they otherwise wouldn't have.
And for example, if somebody says, I'm a virulent anti-Semite, I hate Jews, should you debate them about why Jews are not so bad?
If they're reasonable.
Well, when you give an audience to people who otherwise wouldn't have it, you're really helping some people get a message to people that I think is a damaging message sometimes.
So you wouldn't presumably invite onto the show some people who say things that are, let's say, virulently anti-Semitic.
You wouldn't do that.
I agree.
I agree.
But RFK?
RFK?
Like, really?
By the way, and it's such a great point you're making because some of them are like that.
And I filter those guys out very quickly where they come in and say, let me tell you, guaranteed, you know, it's this.
And it's like, I don't know if you know this guy named David Icke.
I don't know if you've seen some of his interviews.
I brought some of these.
I'm like, first of all, let me get this straight.
You believe in reptilian people.
You believe in this.
You believe in this and you believe in this.
Before I ask any questions, I think it's important for the audience to know what you really believe in.
Yes.
He got upset.
What does that have to do with anything?
I said, your credibility has to be stated before we ask any questions.
I'm not going to get a guy like that to debate somebody from the other side.
I look for reasonable people.
Mother, he's got a big following.
A lot of people follow his stuff and they say half his conspiracy theories are right.
But at the beginning, if you remember, it was linked to 5G and these 5G networks and all this stuff.
That was the whole thing that was going on that people were worried about.
But when two reasonable people are afraid to sit down against each other, like Thomas Sowell against, what's the other guy's name that I had an interview with?
What's the other socialist economist slash communist economist who's got a very, very big following?
AOC's hero.
What's his name?
I had him on the podcast.
You'd know who he is.
You're going to talk about Wolfe.
Are you?
No, I love talking to Richard Wolf.
I don't know if you know who Richard Wolfe is.
He's a socialist professor, according to Forbes, the number one socialist professor.
No, this guy was a pure communist at UC Riverside.
I liked him a lot.
Debating him, Astar.
You can play the video because it's ours.
It's someone you guys all know.
Everybody knows this.
Noam Chomsky.
I'm sorry, Noam Chomsky.
You know who Noam Chomsky is.
Do you know who Thomas Sowell is?
Okay, you know who Thomas Sowell is?
You know, Hoover Institute, you know, coming from the lineage of the great Lilton Friedman.
And I say, noam.
You know, a lot of people say you're afraid to debate Thomas Sowell.
Is that true?
And his physiology changed.
Okay.
To me, you lost the fight.
Because who's Thomas Sowell?
What is so scary about Thomas Sowell?
He's an economist, and he's in his 90s.
You know, my schedule is very busy.
So is his.
Once you reach a certain level, I think it's fair to say your schedule is very busy.
I think it's fair to say that.
You have a lot of different options.
You're taking time to come here, salute.
A lot of respect for you.
I always watch, like even boxing, I don't know if you follow boxing or not.
When a guy doesn't want to face another guy to box, why don't you want to face him?
So that's the skepticism for that.
By the way, this whole thing's coming about the level of trust we have in the U.S. government or mainstream media or experts.
That's kind of how this conversation started.
I don't know how we got into vaccine.
But my lack of trust came from people not wanting to debate anymore.
My entire, I grew up in a family where my mothers were communists.
My entire mother's family were communist.
100%.
Our Bible growing up was a communist manifesto.
And my dad was an imperialist.
One loved the Shah, one loved Stalin and Lenin.
So it was a house filled with debate.
And I'm in the middle.
So forget Hillary against Trump.
Like, this was the best debate I would eat every night, my mom and dad debating.
So I enjoy a good debate.
We get closer to the truth.
So the last couple of years, what was always America's DNA, we kind of got away from the debate concept.
Made me very uncomfortable.
All right.
Well, now are you going to deal with that?
What are you going to do now?
I'm doing what I'm doing right now with the media side.
I'm taking all my money that I'm making, and I'm going to build a media platform where people with courage like you, who are willing to ask the questions, we show them respect and at the same time have tough conversations for the audience to get off and say, I agree, I disagree.
I'm not born here, so I can't run for office.
But we're going to compete in the media space to make sure the right conversations are held.
And hopefully people who also support debate will entertain that idea.
Okay.
All right.
So can we talk about my book?
Yeah, absolutely.
Absolutely.
So before we go into how to invest, would you mind if I ask you a couple other questions about the economy, just purely about the economy before we get into the book?
So when we're talking unemployment, we talk unemployment already.
We talked, what do you call it, debate already.
We talked inflation already.
Bloom, blah, blah.
Okay, so here's one to talk about.
Americans expect worsening in U.S. economy in 2023.
This is Wall Street Journal.
Where do the American people are at?
What direction the economy is going in?
What's going to happen with it?
How much of what you think the American people's concerns about where the economy is at matches what's actually going to happen next year?
Well, I don't think anybody really knows what's going to happen in 2023.
There's an old saying in Hollywood.
In fact, an author, the man who was the scriptwriter for Butch Cassidy and the Sundance Kid, he wrote a book, and the entitle was, Nobody Here Knows Anything, which means you never know when a movie is going to be successful or not.
Well, the same is true in the economy.
Nobody really knows.
You can have experts here and there, but nobody really knows.
It's a guessing game.
We can't determine when the war in Ukraine is going to be over.
Who knows when that's going to be over?
That'll change the economy.
Is China going to invade Taiwan?
That'll affect the economy.
We just don't know.
Are the Republicans going to go try to impeach Joe Biden?
We don't know.
That could have an impact on the economy.
It delays the Congress from passing other things.
Who knows?
So I would say right now, the conventional wisdom, and the conventional wisdom is often generally wrong in Washington, but the conventional wisdom in Washington is that we'll probably have a recession in 2023, mild recession.
Unemployment will go up somewhat.
Congress won't pass that many bills to do anything that's going to spend a lot more money because we've already spent all the money we pretty much can afford to spend.
And I would say I think the American people, when they read as much as they read about the economy going to recession, recession, eventually they kind of reflect that in the public opinion polls.
And that's why people are saying they're worried about the economy.
But people are always worried about the economy.
There's never a time when people are not worried about the economy.
So I don't know that it will be as bad as we had in 2007, 2008, 2009, but it could go down.
But remember, economies always come back.
Recessions always end and the world comes back.
And usually the U.S. economy comes back very, very strong.
We still have an incredibly strong economy now compared to Europe and compared to China.
Our economy is growing much better than China and Europe is.
So I'm not pessimistic about the U.S. economy.
And when it goes down, it will rebound in my view.
So I'm not that worried about the economy.
There are bigger things to worry about.
You had a question, Matt.
Both of you guys had a question before.
I had to worry.
So in 2008, certainly it was far, far worse than what we've seen here.
And we probably haven't even seen the worst of whatever this recession.
Nobody can get there because things historically that were constants become variables, and then variables become constants, and everybody's algebra falls over.
You had said in 2008, you talked about, hey, when all this debt is with the banks, in other words, it all becomes organized, all the TARP and everything becomes the finance.
We're going to enter into a platinum age for private equity.
It turned out to be very, very quick.
Although things are not that way now, what do you see happening after we get through, call it a blip, call it a mini-recession, whatever we think?
What is your crystal ball?
For what?
Where are we going to go?
Are you talking about the private equity or for the economy generally?
Well, you were correct about private equity and you were in that business and you selected it.
But is there anything out there that you are looking at right now that you say, you know what, this is what I see?
And I'm feeling that.
Well, I think the economy, if it goes into recession, will have a rebound.
And when we come out, I think the economy will continue to grow at a reasonable pace.
Remember, we have a $22 trillion GDP.
So the economy is big.
It's hard to grow that at 10 percent a year, hard to grow that at even 7 percent a year.
We've briefly grown it at 6 percent a year, coming back out of 6 percent a quarter coming out of some parts of COVID.
But right now, I think given the economy's size, you're growing 2 or 3 percent a year.
That's pretty good.
And I think we can continue to do that.
But that happens when people feel like they have an incentive to go to work, they have an incentive to invest, the government doesn't do some things that I think backfire on.
Right now, the biggest problem the country has, in my view, aside from the racial problems we have and the legacy of slavery and all the other kinds of problems that exist between certain sectors of the economy, people who are born into poverty and never going to escape.
The biggest problem we have is a dysfunction of the government.
Right now, the Democrats and Republicans just cannot agree on almost anything.
Maybe they'll agree on a spending bill here or there.
But generally, it's dysfunctional.
When I worked on Capitol Hill briefly in the late 70s, A bipartisan bill was considered to be a good thing.
If you were a good legislator, you actually knew how to get Democrats and Republicans to come together.
If now you're on one party or you're the other party, you're not supposed to really talk to people from the other party or work with them.
And I think that's unfortunate.
And that's one of the biggest problems this country has.
It's so acrimonious in Washington, D.C. now that you don't get people even socializing anymore with people from the opposite party.
I wish that would change.
My observation of your book, you've interviewed a lot of people that didn't come from wealth, you included.
And when you're looking at the commonalities between all of them, how to invest, looking at the typical person right now trying to save in their 401k, none of you all in that book really saved.
You guys all invested.
Right.
Well, look, they're different things.
The book was written for different ⁇ this is a book called How to Invest.
And obviously, you're not going to read that book and become Warren Buffett, just like you're not going to read a book by Tiger Woods and become a great golfer.
You can't read a book and all of a sudden change your life that dramatically.
But this is designed for young students who want to consider a career in investing or for the average person and not the superstars.
For the average person who has a reasonable amount of excess income, they probably shouldn't try to be Warren Buffett by all of a sudden picking stocks themselves, picking bonds themselves.
They probably should give their money to a money manager and probably best to put it in an index fund, which will track the market.
Because the average person who makes $50,000, $100,000 a year is not going to quadruple their net worth by picking stocks here and there.
You're just not going to beat the market averages.
So be with the market average and go with an index fund that's a low fee.
That's what the average person should really do, in my view.
When you interviewed Mary Callanan Erdos, she goes on record saying that, you know, there's 2,200 analysts starting.
There's a two to three year training program.
And if you're going to master something, it takes 10,000 hours.
If you're going to work a typical job, it's going to take you five years to master something.
She goes on record by saying, in Wall Street, it's 12 hours a day, six days a week, in two to three years, you'll master something.
She got a lot of pushback because of that.
Are we in a generation right now where people don't want to put in the work and put in the effort to start mastering things?
I think there are always going to be people with ambition, and always people want to get ahead in life, at least in this country.
Some people may rebel against that.
There are some people in the youngest generation who now say, look, I want to work 20 hours a week and I'll work from home and I'm not going to the office.
But those people will be left behind, in my view.
I think there are people who are ambitious who want to get ahead in life.
Mary Erdos, for those who don't know, runs the J.P. Morgan Private Wealth Business, which is roughly a $4 trillion business, and she's managing money for the wealthiest people in the country.
She's a heavyweight.
She's not just anybody.
She's a serious person.
I tried in the book to make it clear, you don't have to be an old white man to be an investment professional who's good.
So I had people from minority backgrounds, people who are women, and I think there'll be more of them.
If I wrote this book 10 years from now, there might not be that many white males in it because the business is changing.
Did you have a follow-up to that?
I was going to say, you're probably going to have an Iranian coming in there.
You're going to interview for that conversation.
In your perspectives of investing, I looked at, you had nine of them.
You had luck, price, due diligence, instinct management, et cetera.
When you talk about price, you mentioned in that aspect your perspective that you've heard that company's management team prefers you as their investor.
They're going to choose you.
Talk to me about leadership and talk to me about management.
Well, the point I was making there is when we're doing a buyout, you're competing.
Everything is an auction pretty much.
And when somebody, my team comes to me and says, the management team of the company want to buy, they prefer us.
Well, they're often not the people making the decision.
It's the owner.
And so when people tell me that the seller or the management team prefers us, I get skeptical a bit because they're not necessarily the decision maker.
So I just think in the end, what it gets down to when you're trying to buy a company is pretty much the price and the certainty of closing at that price.
You know, maybe people like you a little bit more.
Maybe in some cases it makes a modest difference.
But generally, in the buyout world, whoever pays the highest price with the certainty of closing is almost certainly going to win that deal.
Because, PB, I experienced that with you.
And then this exit we've had, that you preferred a certain investor to purchase PHP.
It wasn't just any, because there's a lot of money, there's a lot of offers coming your way, but I saw you, for example, if I'm buying a company, they want you to buy them.
Right.
Because they feel that you're going to take the business to the next level.
And that's kind of like the perspective you had.
It depends if you're controlling the company.
If you're buying 100% of the company, the seller probably doesn't care that much.
If they're going to stay in the deal, then they want somebody they think is going to add value.
Then they might look at something other than price because they're still going to ride with the upside.
Right.
He's right.
That's exactly it because you have to think about the people that have been running a company who are going to be with the new buyer longer than the founder maybe.
So it's important for that partnership to make sense.
And then the structure to be set up.
You know, sometimes it's set up in a way where the founder doesn't go with the deal.
They don't even want the founder to go with the deal.
Like, listen, kind of step out of the way.
You've been partying too much.
You're kind of living a lifestyle the whole yacht.
All this other stuff.
You haven't been operating for four years.
Let us just take over and we'll do our part.
And then sometimes if the founder is very involved, they kind of want the guy to be locked in a little bit for a couple of years before they transition him out.
That's true.
Sometimes if it's a founder, it's a difference if it's a founder and a CEO.
If it's a founder, but he is not really still running the company, they'd probably be happy if he would lend his credibility to the customers, say, I'm still happy with this buyer.
I'm still around, but they don't really want his advice that much.
They don't want him involved that much.
If it's a CEO who's really built the company and is still running at a company and is really valuable, you probably would keep him for a while.
But in a buyout, about more than 50% of the time, the person who's running the company in a buyout at the time you do the deal is not running it when you exit that deal.
That totally makes sense.
And some people would say the biggest mistake that buyout firms make is staying with a CEO too long.
Sometimes a CEO was good maybe before, maybe wasn't that good.
But if you keep riding with him for too long or her too long, it generally doesn't work.
And very often you make changes very well.
Why is that?
Why is that?
Because operating a buyout company with a leverage is different than operating one without leverage.
Also, people have different philosophies.
And somebody, if you built this company, this company you now own, you built it.
It's your baby.
And let's suppose you sell it tomorrow.
You say, look, I know everything here.
Why would you not want to keep me?
And they would say, well, you're nice, but now it's our money at risk.
And our money at risk is different.
And we have different ways of doing things.
Now, sometimes they might say, we want to keep you for a while to keep the customers happy, to make certain that there's no transition.
People and employees aren't leaving right away.
But after a while, they'll say, you know, you don't need to come into work 40 hours a week, maybe 30 hours a week, or maybe 20 hours a week, maybe 10 hours a week.
And by the way, we're going to call you Chairman Emeritus.
And by the way, your parking spot's gone.
Now, at some point, they don't need you so much.
That's what happens in life.
What's the difference between a way a founder is wired versus a CEO is wired?
What do you see to say, I don't think this founder is a real CEO?
What's the difference between those two?
A founder is willing to take entrepreneurial risks.
When you take an entrepreneur risk, you're betting a lot on something happening.
And if it doesn't work out, you lose a lot more.
The CEO is basically getting a salary and maybe some stock incentives and so forth.
But he or she will transition to some other job and they can run another company.
The founder has more of his heart and soul in it as a general principle.
And so when you build something, it's much different than if you're running something.
That makes sense.
That makes sense.
Right now, do you think this whole situation with Elon buying Twitter, are you guys optimistic about what's going to happen with the Twitter valuation?
Are you kind of like, yeah, it's not something we're interested in?
How are you viewing what Elon's doing?
I'm not an investor in the company, so I can give you that perspective without being an investor.
I think he paid a high price.
In other words, what happened is he bought the company at a, agreed to buy the company, and then the tech transition occurred and the tech valuations went down.
So he paid probably 25% more than the company was really worth.
He knew that.
But he thought he could turn around because he's an engineering Marvel and so forth.
He then made some changes and now as CEO that have really taken away a lot of the customers, a lot of the advertisers.
I think the company cannot service its debt normally.
It takes about a billion dollars a year to service the debt of the debt that he borrowed.
He borrowed about, I think, $11 billion.
It takes about $1 billion a year to service that debt.
They're not earning $1 billion a year.
So what's going to happen?
He'll either have to subsidize it and pay it out of his own proceeds.
He could take the company bankrupt.
The problem with taking the company bankrupt is this.
In the end, the senior debt will own the company.
So he will have lost a lot of money.
The $11 billion.
Yes, $11 billion would own the company.
But remember, he could go buy that $11 billion at a discount.
The banks are carrying that debt at 80 cents on a dollar.
He could probably buy it at 70 cents on a dollar.
So he buys the debt.
He then owns the company.
He could bankrupt the company.
He then owns the company because all the equity is wiped out.
Of course, his friends are in the equity, and he's in the equity.
So it's a big loss either way.
There's no easy way out of this, in my view, other than kind of getting the revenue back up again.
It's a tough, tough slog, and I don't envy him trying to run this company.
Remember, he's also running two other companies.
That's right.
That's right.
It's enough to run one company at a time.
He's running two other big companies, and both of those are pretty successful.
Billion companies.
Yeah, somebody, the story came out saying the third largest Tesla stock owner says Elon Musk should step down as the CEO.
This story just came out because some of these other guys, they're like, dude, what are you doing?
We believe in Tesla with you running it.
Indonesian billionaire Kugan Leo, the third largest individual shareholder of Tesla, accuses Musk of focusing too heavily on Twitter.
Elon abandoned Tesla and Tesla as no working CEO.
Tesla needs and deserves to have a fully working CEO, full-time working CEO.
Leo went on to suggest that the Tesla board of directors was obligated to look for replacement.
The billionaire suggested that Musk be given the opportunity to find and name his successor with the independent supervision of the board.
He added, Elon was the proud father.
Tesla has grown up an executioner.
Tim Cook-like is needed, not Elon.
Yes.
And what's happened is the market cap of Tesla was probably at its peak $1.1 trillion.
And that made him the richest man in the world because he was the biggest shareholder of it.
Today, I think the market cap is maybe closer to $500 billion.
So it's lost about half its value.
Why?
Well, one thing is that he sold a number of his shares in order to buy Twitter.
So whenever you sell shares, it depresses the price.
And now people think that he's not focused on it, and therefore he's not the genius behind Tesla.
And a lot of people are selling.
So he's lost half of the value of the company, and that's why some of the shareholders aren't happy.
So you think the idea of bringing a Tim Cook is a good idea, like what he's suggesting.
Well, I think somebody needs to be running the company, whether Elon Musk is willing to give up running the company.
I don't know.
I'm not involved in it.
But I'd say that somebody should be running the company and somebody should be running SpaceX, too.
It's hard to run one company once.
How do you do that?
How do you run three companies over?
A few billion out of companies simultaneously.
Well, he put a lot of his personal fortune into Twitter.
He wants to turn it around.
He realizes now it's tougher to turn around than he thought.
So right now the company is in somewhat disarray.
But he's done a really good job of building these companies before.
Maybe with enough time he can make Twitter turn around.
Take some time.
By the way, what do you think about what Tim Cook did with Apple?
Would you put him at the top as the best CEO in the market today?
When Steve Jobs died, the market cap of Apple was roughly $350 billion, more or less.
Now the market cap is, what, $1.1 trillion or $1.2 trillion, something like that, at one point.
So what he did is staggering.
Capital reached $3 trillion at one point, valuation.
What is it right now, by the way?
Well, it's probably over.
Oh, there you go.
$2.1 trillion as it today.
$2.1 trillion.
Okay.
So the market cap is now about six, seven times what it was when he inherited the company.
He did a spectacular job.
I've interviewed him.
He's a terrific person.
I'd say right now there was a survey done by the Wall Street Journal of who was the best CEO today, and he certainly was one of the top.
I think Satcha Nadella, who's run Microsoft, when he took over Microsoft, that company stock hadn't moved in 10 years, 10 years.
Now the stock is up like 10 times.
What he did to make Microsoft much more valuable than it had ever been is staggering.
So he's one of the best CEOs out there, in my view.
And Tim Cook is another one.
Tom, you always talk about him.
You always give credit to him.
Yeah, what's amazing is whether you look at inflated dollars or not, I mean, Tim Cook has generated more shareholder value than any CEO in the history of the American experiment.
And it's just, even if you discount it for inflation and do all the adjustments, it's phenomenal.
Spectacular job he's done.
And remember, when he took over as CEO, people didn't think he could do this because he was not the superstar public figure that Steve Jobs was.
But he was more mild-mannered.
He was basically known as a supply chain person.
But he's done a spectacular job.
And I would say he and Satcha Nadella have both done turnarounds or made companies much more valuable than they were before.
Have you read the book after Steve?
No, I have not.
He just came out.
It's a very, very interesting book.
And most of it is about Tim Cook.
Very, very insightful.
I know him reasonable.
When I was chairman of the board of the Duke, I put him on the Duke board.
And, you know, he was a graduate of the Duke University Business School.
Top five books that impacted you the most.
Like, what are some books that when your kids ask you, Dad, give me five books I should read?
What would those five books be?
They probably wouldn't be my books.
I don't think my kids have read any of my books.
Look, if you're on a desert island and you only have one book, what book would you take?
Probably you'd take the Bible because the Bible has so many things about human life and the way humans have gotten together over the years and interacted with everybody.
And the Bible is an unusual book when you think about it.
75% of it is the Old Testament.
25% is the New Testament.
But in both the Old and New Testament, there are a lot of wisdom in there.
I just think that's probably one book you would probably want to have with you.
Maybe one of your books.
I don't know.
Yeah, I mean, I want to know what you're going to say.
If I'm on an island, I got the Bible.
That's pretty good.
If I got the business books on an island with no market, no technology, I'm screwed.
I probably need a big book that I can make on fire.
Like, give me the biggest book of all time.
What else would you say?
You've read a lot.
I do read a lot of books because I have programs where I interview authors.
And I think when I interview authors, I generally like to read the book.
So I'm just reading a number of books now for interviews I'm going to do.
I just did an interview the other day of the man who led the raid on Bill McRaven.
Bill led the raid to capture Osama bin Laden.
He had a book called Sea Stories.
And interviewing him, it's incredible how we caught Osama bin Laden and how we at the time we caught him.
He didn't know we actually had him.
And so what happened was they had to take him out of his body bag.
So an Admiral?
That's him, Bill McCarthy.
Oh, he gave a speech.
He was viral.
University of Texas, yeah.
Make your bed, you were saying.
Well, what happened was they captured him.
They put him in the body bag.
They bring him back and they unzip the body bag and they pull him out and say, is this Osama bin Laden?
Well, his beard looks shorter than they had thought.
We weren't sure.
They knew he was 6'4 ⁇ .
But they didn't have a tape measure.
So they saw another sailor there.
He said, Sailor, how tall are you?
6'2 ⁇ .
Come over here.
Lie down next to this guy.
Oh, you look like you're two inches shorter.
So he called President Obama, President Obama, and said, We think it's him.
We haven't done the DNA test, but I just had a soldier or sailor lie down next to him who was 6'2 ⁇ .
This guy looks two inches bigger, so I think it's him.
And Obama said, Well, wait a second.
You had a $90 million helicopter and you didn't take a $10 tape measure with you.
Why didn't you do that?
And so when he met with Obama in the Oval Office later, Obama gave him a tape measure.
What a good story right there.
What a good story right there.
90 million, here's 10 bucks.
Go measure it next time instead of putting a guy laying next to him.
What else?
So we got two books so far.
Give me another one.
Give me one that's an evergreen one, not one that was just written, like something you read where you're like, because look, if there's something that a lot of people want to, first of all, everybody has to read the book how to invest, especially if you want to get into the business, because you're learning from 30 different people's philosophies, right?
It's not like you're learning from one person.
By the one thing that was very interesting is how everyone talked about Warren Buffett.
Like everybody edified him and gave him a ton of credit.
Everybody.
It's as if they're talking about, would you say he's the Michael Jordan of that industry?
Yes, and the reason is this.
He has averaged 20% a year for 60 years.
60 years.
Not 20% a year for two years, three years, 60 years.
I mean, that's incredible what he's done as an investor.
Nobody's quite ever done that.
And now he's still doing this when he's in his 90s, early 90s.
So that's incredible.
If you want to read a book about him, there are a lot of great books, more books about Warren Buffett probably than Abraham Lincoln, if that's possible.
But I would say the book called Snowball is probably the best one on Warren Buffett.
Really, really good book.
Warren Buffett hasn't really written his own book in that sense.
Another book I've read recently, there's a man named Sid Mukherjee who wrote a book called The Emperor of All Maladies about Cancer.
And it was a really well-written book.
It won the Pulitzer Prize.
His first book won the Pulitzer Prize.
He has a new book out called The Song of the Cell.
He's his third book.
The first book was on cancer.
Second book is on genes.
Third book is on sales.
It's on the New York Times bestseller list right now.
I've just, that's it.
No, that's the first one.
That one won the Pulitzer Prize in his first book, which is pretty good, your first book to win the Pulitzer Prize.
And one I just interviewed him once called The Song of the Cell, which is his latest book.
And I've just interviewed another great author, John Meacham.
Meacham has a new book out, number one bestseller on Abraham Lincoln.
And more books have written about Abraham Lincoln than anybody other than Jesus Christ.
So it's incredible.
But he has a lot of good insights in it.
I'm just finishing a book that I'm interviewing the author on, Maggie Haberman, who wrote a book about Donald Trump.
It's a quite interesting book on insights about Donald Trump.
There are an infinite number of Trump's books, but this one is she covered him for the New York Times for four years, and it's a pretty interesting book.
That's it, Confidence Man.
Yeah, I saw that one.
I saw that one.
I saw that one, yeah.
Why do you think people are so enamored by this guy?
Good, bad, and ugly.
Is it because he's like a complicated personality?
He's a very unusual person.
I do know him.
I met with him when he was president a number of times.
And I would say unusual, unusual person.
Usually people who become president of the United States have some government background.
He didn't have any background in government, so it was an unusual situation.
But we'll see what happens there.
Out of all the personalities you sat down with, who is like the one where you would say, this guy, you know, if he wanted to, he could be a president.
I mean, you've met with a lot of leaders with strong personalities.
They have to be strong negotiators, processors.
Who's that one we took?
If this guy ran, I think he would win.
Well, not now, but in his day, I think he would have been a great president.
He was in my firm for a number of years, Jim Baker.
He had been Secretary of State, Secretary of Treasury, Chief of Staff under Ronald Reagan, 12 years, unblemished record, practically, in federal service.
He's now 93 or 94, not obviously going to be running for president.
But he was an incredible person, was in our firm for quite some time, and I really admired him.
Did you read his book?
Did you read?
There's a book written about him.
1,000-page book, 1,100-page book.
Well, the book he wrote right after he left, I did read it, but he wrote a second book, which I found better, which is more about politics and so forth.
The second book I enjoyed more.
The book that's written about him, The Man Who Ran Washington.
That's the one.
I couldn't put it down.
The Peter Baker book?
Yeah.
Yeah, Peter Baker wrote with his wife.
That book is a really good book, and I think it's a really good read on how Washington works and how one man who didn't have a real history in Washington, wasn't really a politician, he came to Washington because his best friend George Bush helped him get a job there.
And all of a sudden, he became very, very prominent in Washington, did a great job as chief of staff to Ronald Reagan, considered the gold standard to be chief of staff.
You go on record saying that the greatest American is and the greatest president is Abraham Lincoln.
There's no doubt about it.
What is some of those personality traits you think that could be adaptable today in 2022?
Abraham Lincoln held the country together.
At that time, most people would have said, the South, you want to go away?
Go away.
Because it wasn't easy to say, we're going to fight a Civil War of this, in part because the truth is, the Civil War was not fought by the North to free the slaves.
That wasn't the initial mission.
It was to hold the Union together.
Later, he did the Emancipation Proclamation, which was done as a war measure to help him win the war because he was going to have 200,000 black soldiers fighting for the Union, which he did and ultimately helped win the war.
Abraham Lincoln had a number of great qualities, but one of them is one we haven't talked about, which is humility.
Abraham Lincoln didn't go to Ford's Theater the night before he was assassinated and say, you know what, I won the Civil War.
Aren't I great?
How great am I?
He didn't brag about himself.
He had a lot of humility.
And I think humility is a great virtue.
And he had a lot of self-deprecating humor that he would bring to the case.
You know, he would say, you know, people say I'm two-faced.
Well, if I had two faces, why would I wear this one?
He was the person who held the country together.
There's no doubt that the country would not have stayed together without Lincoln.
Most politicians would not have done what he did.
So I think he was the greatest American.
When he became a president, was it Buchanan?
James.
Buchanan was the previous president.
So he would say, listen, slavery is something I'm going to work with and go with.
He was kind of like Ford just to get away from.
Lincoln said the same thing.
See, the 13th Amendment abolished slavery.
That came about at the end of Lincoln's term.
It was passed by Congress a couple days before he was assassinated.
But when James Buchanan, who was not a great president, maybe one of our weakest ever, he supported something called the Corwin Amendment, which was the 13th Amendment as it was intended to be.
That said, slavery is the law of the land and it can't be changed in the existing states that have it.
Lincoln, in his inaugural address, the first one, he endorsed that because he thought he had to make it clear to people in the South, look, I'm not trying to get rid of slaves.
I just don't want slavery to be expanded to the other states, the Western states.
But in your states, it's in the Constitution.
We're going to keep that.
And Lincoln said that in his inaugural address.
Now, obviously, he evolved over a period of time.
But Lincoln was not an abolitionist by far.
He was not.
There were many people who wanted to abolish slavery.
He was not one of them initially.
What's your favorite Lincoln book?
I think probably, well, I think the John Meacham one is really good.
But Doris Kearns-Goodwin, The Team of Rivals, which was made into the Lincoln movie, is a spectacular book.
But she, you know, there are 10,000 books on Lincoln.
And I asked Doris Kearns-Goodwin, why did you think the world needed another one?
But she came up with a novel concept that Lincoln was so secure that he took people who were his rivals for the presidency and he put them in the cabinet.
And they ultimately became people who had initially thought he was nothing, but now they became to admire him greatly.
Do you think there will be a time where we'll have a Republican president and a Democratic VP or a Democratic president and a Republican VP?
Because I think it happened one time.
What was the year when a candidate had an opposing party VP that they're running with?
It was somebody that happened.
And by the way, this wasn't too long ago.
This was like 50, 60 years ago, 70 years ago.
Do you think we'll have that ever happen?
It's hard to see because in the old days, the way the Constitution was originally set up, whoever had the most votes for president got to be president.
Whoever the second most became vice president.
We've changed the Constitution, so that probably is harder to do now.
But look, maybe to get a unified ticket, somebody, you could do that.
But on the other hand, the vice president doesn't have that much power relative to president, so I'm not sure the vice president's party would think it's a good consolation, but nothing is impossible.
Who could say what's impossible?
That would be very ⁇ by the Libertarian Party still runs that way.
Guy that got the most votes becomes a candidate in a second time.
I'll give you the last question before we wrap up.
Any questions you have?
Yeah, you know, in your book on investing, and I think what you just said about going to the young generation and where it goes and everything.
You know, a lot of people, and I was curious about it, is kind of the forecast on you follow government, and this is a nonpartisan thing, on Social Security, Medicare, and the entitlement.
How does structurally we have to change as a nation so that we can serve all that?
Because there's this mass of people that are retiring that deserve to get what they paid for, literally, out of their tax.
Well, remember, we have a pay-as-you-go system, which means we have no money.
So when you pay your Social Security every week, that's going to pay somebody else's grandmother or something, because there's no real money.
There's no lockbox.
There's no trust fund.
When Social Security was set up in 1933, the average life expectancy in the United States was 65.
When could you collect your Social Security?
At 65.
So not that many people were living in the Cetlick.
Now it's like 82, 83.
So now people are living for a long time and they're collecting their Social Security.
We don't have enough money to be able to keep paying it right now.
The entitlement part of the budget is with defense spending, entitlements, and interest, it's roughly 80 percent of the budget, 85 percent of the budget.
So only about 15 percent is left for everything else.
So at some point, you're going to have to do one of three things.
You either cut the benefits, you increase taxes, or you basically have to increase the amount of money that you're going to borrow.
You're going to borrow more money.
Or you further extend when they can get the Social Security benefit.
Yeah, you can do that too.
But you're going to have to borrow more money.
We have $31 trillion of debt now, $31 trillion.
That's not all the commitments, though.
That's just the debt that we have.
That's the debt.
That's the debt, and that's the money we've already borrowed.
The future commitments are staggering.
But we have a higher percentage of debt to GDP than any country in the world, practically except maybe Italy, which is not a great role model.
No, it's not.
So right now, the only way you're going to solve this problem is you've got to cut benefits.
You can extend the age, which is a way of cutting benefits.
You have to increase taxes, or you just keep borrowing more money.
There's no other way around it.
Do you have a follow-up on that?
Because for me, you know what I look at sometimes?
I'm like, okay, you know, the American economy is this, it's strong, we're this, we're that.
I mean, how the hell do we eventually write off the debt?
Like, what happens when we can't make it?
Because interest rates are going up right now, and what if we can make the payments?
Because to Japan or China, one of them we owe $1.1 trillion, which I think is Japan.
China, I think we own $1 trillion.
These are not small interest payments that we have to make.
What happens when we default on those things?
Well, hopefully we never default, but when the interest rate is essentially zero, you can borrow a lot of money.
And so the federal government was paying maybe 3 percent of the budget for interest.
Now the interest rates are going up.
We're paying 6 and 7 percent of the budget for interest because interest rates are going up.
$31 trillion.
That's a lot of money.
And we only had 15 percent to play with of the remaining budget.
That's about it.
How long is that sustainable, though?
There's only one way out of it.
You inflate your way out of the economy, out of it.
That's the only way out.
Because we're not going to default.
That's unrealistic.
We're not going to increase taxes.
That's very hard to do.
We can do it occasionally.
It's not easy to cut spending where you're going to cut it.
So you're not going to go to the IMF for a bailout.
So in the end, you're going to inflate your way out of it.
That's the only way out of it.
You're not going to default.
I have a follow-up question for the common Joe out there.
It's watching this podcast.
Fidelia came out with a report that said the average savings of baby boomers today is $138,000 for retirement.
Gen X, $98,000.
Millennials, $63,000.
Gen Z, $37,000.
In your opinion, is the typical person attempting to save for retirement, are they getting crushed right now for the future or do they have to do something like you have to do it?
We have a very low savings rate in this country compared to other countries, very low savings rate.
We have a consumer economy.
We encourage people to buy things.
Tell people don't save that much.
If you want to reduce our trade deficit, tell people to save more.
But we don't do that.
It's just because it's thought to be difficult to get people to save more.
That's a real problem.
And a lot of people in this country are living paycheck to paycheck.
A very high percentage are increasingly living paycheck to paycheck.
There are a lot of problems in the lower part of the economic strata, for sure.
And it's not changing overnight.
What's your solution?
What's your suggestion for the demographic?
That's the demographic.
We all come from here at this table.
If I had the solution, I would be in Iowa, New Hampshire.
I don't have the solution.
I don't know.
If I had the solution, I would have done something about it.
There's no easy way out of it, no easy way out.
And I don't think anybody has an easy way out.
That's going to be tough.
I mean, you don't have a choice but have a side hustle.
I mean, you have to make your income's not going to make it.
Thank you for inviting me.
This has been a blast.
Thank you for coming out.
It's my pleasure.
What we're going to do is wrap.
Let's put the link below.
Folks, if you watch this, highly recommend you go buy the book How to Invest.
We'll put in the chat.
We'll put in the description.
Get the book.
It's one of the books I recommend you read during this holiday season.
