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This is the second installment of a two-part conversation featuring Jason Zweig, arguably the greatest financial writer of all time. You can find part one of the conversation here.
You may know Jason from his column, The Intelligent Investor, in the Wall Street Journal. Prior to joining WSJ, Jason helped Nobel Laureate Daniel Kahneman write his massive best-selling book: Thinking, Fast and Slow. Before that, Jason was a senior writer for Money magazine and a guest columnist for Time magazine and cnn.com.
Jason is the author of Your Money & Your Brain (on the neuroscience of investing) as well as The Devil’s Financial Dictionary (a satirical glossary of Wall Street). He is also the editor of Benjamin Graham’s investment classic, The Intelligent Investor, a book Warren Buffett has described as “by far the best book about investing ever written.”
These are the notes from my conversation.
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Jason Zweig’s Unplanned Path to Financial Journalism [00:30]
In this second part of our conversation, Jason Zweig opens up about his unlikely journey into financial journalism. Though he initially dreamed of writing novels, fate intervened, leading him to journalism. Jason’s first role was fact-checking at Time magazine, a job he landed by chance, and that role ultimately led him to Forbes. There, he was unexpectedly assigned the role of mutual funds editor, a position he initially found uninspiring. Yet, he decided to make “a virtue out of necessity.”
Discovering that mutual funds held a staggering $1.5 trillion in assets, he realized that the industry had untapped potential for storytelling. This approach—to see value and opportunity even in less glamorous assignments—marked the beginning of his dedication to uncovering compelling stories in finance.
Jason recalls a piece of advice from Jim Michaels, then-editor of Forbes, that deeply influenced his career. Upon being assigned as mutual funds editor, Jason asked Michaels for guidance. Michaels’ response—“Don’t get anyone’s blood on your hands”—was a stark reminder of the responsibility that comes with financial journalism.
Jason interprets this to mean that providing financial advice carries weight, as poor recommendations can harm readers.
This advice prompted him to develop a set of principles: always recommend investments he would suggest to his own family, rigorously research, and never make impulsive claims.
Jason even created a personal rule he calls “WWMB”—“What Would Mom Buy?”—as a moral compass, emphasizing the importance of ethics and responsibility in a field where advice can impact lives.
Learning from Industry Giants: Wisdom from Buffett, Munger, and Others [7:31]
Jason’s role at The Wall Street Journal has granted him rare access to some of the most influential figures in finance, such as Warren Buffett, Charlie Munger, Jack Bogle, and Daniel Kahneman. Beyond their investment insights, Jason has seen the personal side of these legends.
One of his favorite memories involves Harry Markowitz, a Nobel laureate known as the father of modern portfolio theory. When asked how he personally diversified his portfolio, Markowitz admitted he simply chose a 50/50 split between stocks and bonds to avoid regret—an approach that defied his own complex theories.
This candid response highlights that even the greatest minds are guided by basic human emotions, emphasizing the importance of simplicity and regret avoidance in investing.
Daniel Kahneman’s Work on Cognitive Illusions [11:10]
Jason shares insights from his time working with psychologist Daniel Kahneman, whose work on cognitive illusions reshaped our understanding of decision-making. Kahneman and his research partner, Amos Tversky, initially studied visual illusions, which led to the broader concept of cognitive biases. Just as visual illusions can trick our eyes even when we’re aware of them, cognitive biases impact our financial decisions despite our knowledge of them. Kahneman himself admitted to still falling prey to these biases, a humbling reminder that awareness alone isn’t enough to overcome them. For investors, Jason emphasizes the need for structure and discipline to counteract these mental pitfalls.
Neuroeconomics: A Window (and a Mirror) into Investor Behavior [15:20]
Exploring the field of neuroeconomics, Jason explains how neuroscience, psychology, and economics converge to reveal the unconscious biases that influence our financial decisions.
Developed by neuroscientist Paul Glimcher, neuroeconomics examines how external factors—like colors or visual cues—can subtly affect our choices. For instance, Jason describes how exposure to the color red can increase heart rate and subtly nudge people toward risk-averse decisions without their awareness.
This insight underscores the need for investors to establish decision structures, as our environments can unknowingly impact our behavior. This field reinforces Graham’s teachings on the importance of creating rules and processes to ensure rational, disciplined choices.
The Brain on a Hot Streak: Dopamine and Anticipation [19:14]
Jason explains how the brain reacts during a “financial hot streak.”
When investors experience a string of wins, their brains release dopamine, reinforcing a pattern of expected reward. This cycle is often unconscious but powerful; studies show that the brain activity of someone on a winning streak resembles that of a cocaine addict anticipating their next hit.
Jason notes that this phenomenon explains why speculative investing can become addictive, as the brain begins to “see” the next price movement as an inevitable gain. Without proper safeguards, this can drive investors to take increasingly irrational risks, lured by the brain’s built-in reward system.
Laughing at Wall Street: Creating The Devil’s Financial Dictionary [24:10]
Inspired by Ambrose Bierce’s The Devil’s Dictionary, Jason embarked on a humorous project to define financial terms with a satirical twist.
The Devil’s Financial Dictionary began as a series of definitions Jason wrote for his own amusement, eventually becoming a published book. He explains that while the tone is lighthearted, the definitions reflect real truths about the financial industry’s quirks and contradictions.
His approach offers readers a humorous yet revealing look at Wall Street, showing how humor can be a tool for understanding complex or opaque topics. Jason’s dictionary serves as both a playful critique and an educational tool, inviting readers to question the industry with a critical eye.
Questioning the Future of Finance [29:08]
In our conversation, Jason shares questions he’s pondering about the future of finance.
He explores whether value investing will ever regain prominence and examines the implications of widespread indexing. Jason notes that if too many people adopt index investing, it could theoretically disrupt market efficiency.
Another area of curiosity is cryptocurrency, specifically whether Bitcoin and blockchain technology will live up to their proponents’ expectations or eventually fade. These questions, Jason says, are reminders that finance is filled with uncertainties—and that even seasoned experts must approach predictions with caution and humility.
A Lesson from the Antiques Market: Not Everything Always Holds Value [34:13]
Reflecting on his family’s experience in the antique business, Jason discusses the unexpected loss of value in once-prized colonial American furniture.
Despite its high value for centuries, demand for these antiques dropped without explanation, illustrating how markets can shift in ways that defy logic. He suggests this phenomenon serves as a reminder that assets—whether Bitcoin, gold, or collectibles—are only as valuable as the demand for them. Just because something has appreciated for decades doesn’t guarantee it will continue to do so.
This story highlights the unpredictability of markets and the importance of recognizing that value is ultimately driven by sentiment, not inherent worth.
Price Feels Like Proof: The Trap of Anchoring on Success [39:05]
Jason introduces the concept of “price as proof,” where investors interpret a rising asset price as validation of their initial thesis.
This phenomenon is particularly common among speculative investors who view price increases as proof that their insights are correct. However, Jason warns that prices can also quickly reverse, challenging investors’ beliefs. Anchoring on price alone can trap investors in a cycle of overconfidence, making it difficult to re-evaluate or let go of their positions. He advises investors to question their assumptions regularly and to recognize that price movement alone isn’t proof of sound reasoning—it’s often a reflection of sentiment and timing.
What Excites Jason Zweig About the Future of Investing [41:18]
Ending our conversation on a positive note, Jason shares his excitement for the future of investing.
He reflects on how today’s low-cost, accessible investing environment is the best it’s ever been for individual investors, who now have unprecedented opportunities to participate in markets at minimal cost. He’s also inspired by the curiosity younger generations show about personal finance and investing. Jason is equally grateful for the endless stories and insights that finance continues to offer, finding that each week brings new topics to explore. This ever-evolving field, he says, is what keeps him passionate about his work and excited for what lies ahead.
Resources:
- EP 178: Why ‘The Intelligent Investor’ Still Matters in a Fast-Paced Market With Jason Zweig
- The Intelligent Investor
- Thinking, Fast and Slow
- Your Money & Your Brain
- The Devil’s Financial Dictionary
The Long Term Investor audio is edited by the team at The Podcast Consultant
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