Episode #381: Leonard Mlodinow, Theoretical Physicist & Author – How To Harness Your Emotions To Become A Better Investor – Meb Faber Research



Episode #381: Leonard Mlodinow, Theoretical Physicist & Author – How To Harness Your Emotions To Become A Better Investor

 

Guest: Leonard Mlodinow is a theoretical physicist and author recognized for groundbreaking discoveries in physics, and a passion for making science accessible and interesting to the general public. He was on the faculty of Caltech, and is the author of five best-sellers.

Date Recorded: 12/15/2021     |     Run-Time: 47:58


Summary: In today’s episode, we look at the relationship between our emotions and decisions. Leonard explains how emotions can make us emphasize or de-emphasize certain beliefs and even completely ignore certain data points. Then we dive into how emotions impact our investment decisions. We hear what studies say about how the best traders handle their emotions and talk about the role of social and emotional contagion on financial markets.


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Links from the Episode:

  • 0:40 – Intro
  • 1:20 – Welcome to our guest, Leonard Mlodinow
  • 2:15 – How a physics graduate got a writing credit in MacGyver
  • 3:57 – The inspiration behind writing Emotional: How Feelings Shape Our Thinking
  • 8:27 – How the discussion around emotions has changed over the years
  • 14:01 – How to integrate our emotions into everyday life
  • 23:45 – Observations and surprising lessons he learned while writing this book
  • 25:46 – The relationship between our emotions and finances
  • 30:30 – Leonard’s thoughts on the world today writ large and how it impacts our emotional states
  • 35:02 – How our underlying emotions can manifest as physical ticks and behaviors
    41:20 – Elastic: Unlocking Your Brain’s Ability to Embrace Change
  • 42:03 – The Idea Multiplier (Vanguard)
  • 44:02 – Learn more about Leonard; leonardmlodinow.com; Instagram; Twitter

 

Transcript of Episode 381:

Welcome Message: Welcome to the “Meb Faber” show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb: Welcome podcast listeners, we have a great episode today. Our guest is a theoretical physicist and best-selling author of a number of books, including The Drunkard’s Walk and Emotional: How Feelings Shape Our Thinking, which releases next week! In today’s episode, we look at the relationship between our emotions and decisions. Our guest explains how emotions can make us emphasize or de-emphasize certain beliefs and even completely ignore certain data points. Then we dive into how emotions impact our investment decisions. We hear what studies say about how the best traders handle their emotions and talk about the role of social and emotional contagion on financial markets. Please enjoy this episode with physicist and author, Leonard Mlodinow.  

Meb: Leonard, welcome to the show.

Leonard: Great to be here.

Meb: We got a fellow Angelino. Tell everyone where here is for you today.

Leonard: Here I am in South Pasadena, beautiful, sunny, South Pasadena, California near Caltech.

Meb: I’ll tell you something funny that has an odd tie into this show yesterday, and you’ll appreciate this as a LA person where it rains like two days a year. It was absolutely pouring cats and dogs at my house, and we have an issue where drain doesn’t work next to my house. And so, I was drilling some holes in the side of the wall because the drain’s all plugged up. And my wife looks at me, and she goes, “Do you know how to spell MacGyver?” She’s like googling this. And I’m like, “Why is MacGyver your outlet for the very young listeners?” It’s a TV show. But then, of all the credits you have, I think the most impressive is you have a MacGyver writing credit. How did a physics guy end up starting to write TV shows in Los Angeles?

Leonard: Well, I’ve liked writing ever since I was… third grade is the first short story I can remember writing. So I’ve always enjoyed writing. And at some point, when I found out I was got my first job at Caltech and then I was moving to LA, I decided I have to start writing screenplays, and one thing led to another. And pretty soon, I had a career where I left physics and took a break at least. I’ve been doing physics my whole life. But I left physics and had about an eight or nine-year career in Hollywood, wrote for “MacGyver” and “Star Trek: The Next Generation” and a bunch of other shows. And that was fun, except that’s not the most fun industry to be in. People know it’s kind of a problematic industry in some ways, in terms of the culture, but it was fun making up stories. And “MacGyver” was cool, and “Star Trek” were both cool because I could kind of apply my science, although I have to say you have to have a light touch because they were really interested in stories and drama more so than science. But I always snuck in science wherever I could. Now I do the opposite. I try to sneak drama into my science books.

Meb: That’s why you can bridge the gap so much. Despite tech influx and everything else, LA is still very much a media town, and I always joke that trying to break into that world, it’s like investment banking, as cutthroat and challenging. And as much you wrote an entire book on the topic of randomness, some random challenges, I said that the biggest challenge is it’s not nearly as highly compensated as banking at the entry-level necessarily if you’re in the mailroom. You’ve written a lot of awesome books, some with people like Stephen Hawking, some about people like Richard Feynman and “Times.” You have a new book out, which I have called emotional, which my camera’s not zooming, but listeners will do show note link to it. That should be out by the time this drops in January, which I’m excited about. I’ve read other books of yours, “The Drunkard’s Walk,” etc. We’re going to talk about emotional mostly today. What was the inspiration? You’ve written a lot of books, pen to paper. You said you like to write. I hate to write. I only write a book because I cannot write it anymore. It has to, like, vomit it out. But you like to write, but what was the inspiration for this one, in particular? This topic? Why was itchy head scratch?

Leonard: Some years ago, I got interested in psychology and neuroscience. That must be over 10 years ago now, and I had been writing science books. I wrote, as you mentioned, “The Drunkard’s Walk” about randomness. I wrote a book about curved space, and I worked for Stephen Hawking. And as a physicist, there’s a certain number of physics books I was interested in writing. But after a while, you kind of run out of the physics topics you’re excited, and I was on the faculty at Caltech. And a friend of mine was a famous neuroscientist, Christof Koch, that your listeners may know him. He studied consciousness, and I got interested in that. I thought it was fascinating to try and understand the human brain. And that time, about 10 or 15 years ago, a lot of new technologies were coming online to help study the brain, which was really raising the level of brain study from the old behavioral or the old psychology and laboratory psychology, which wasn’t so much a hard science because the experiments on people where you tried to imitate situations, you couldn’t really form real situations to experiment on them, and you’re studying their behavior. But now, we got to where we can actually measure things and look inside the brain at what’s happening, and that opened up a whole new era of psychology, and I got interested in that toward the beginning then. And I ended up writing the book, not on consciousness, but on the unconscious mind, which Christof was very supportive of. And that was my book “Subliminal,” called the unconscious, “How Your Unconscious Mind Rules Your Behavior.” And that was amazing to write that book. I learned so much about myself and things that I’ve been applying and understanding about myself ever since.

So that got me interested in a certain path. I wrote a book called “Elastic” after that about how we get new ideas. And then, I was talking to another friend, also a Caltech professor, famous emotions researcher, neuroscientist named Ralph Adolphs. And I was saying, you know, I’m thinking about writing a book on emotions because I really wanting to understand myself better. And I love when I write, to be able to give that to people, to give them a scientific understanding of themselves, not a self-help but based in science. I mean, something you can apply to yourself, but that’s based in science. And he said, “Oh, no, no, whatever you do, don’t write about emotions.” I said, “Why not?” He said, “Oh, because it’s undergoing a revolution right now. We’re changing all our ideas about emotions.” I said, “That’s it. That’s what I want to write.” And it was a good and a bad idea because he had a point that it was an enormous task to undertake, to understand what everyone was doing and the different camps and the different ideas that are there and to synthesize and make sense of it and to present that.

So it took quite a while, but it was an amazingly rewarding process. And the book came out great because it’s something that’s very informative about how you think, it changes your thinking, I think, if you read the book because you understand that emotions are helpful. They’re not something to be thought of as the opponents of rational thinking. In fact, your thinking, your quote, “rational thinking,” or your reason is not even separable from emotion. There’s no such thing as pure rational thought in the human brain. And how that works and how that helps you in your life and your decisions and your motivation was an amazing thing to learn. And it also gave me a tremendous opportunity to tell crazy stories because the field of emotion, by its nature, is connected to all kinds of weird stuff. So I got stories of people doing head transplants and having their friends shoot them to garner sympathy from an ex-girlfriend and people trying to induce orgasms by stimulating the brain. I mean, there’s like crazy stuff in there, and that made it a lot of fun.

Meb: There’s some very real world, pop culture references in the news recently about some similar sort of things happening where you always kind of shake your head and say, “Is this real? Is this happening?” But emotions are a powerful force. We spend a lot of time talking about emotions when it comes to the world of investing and money, so often is a taboo subject. In many ways, and I feel like this has changed, but chatting about emotions, particularly maybe our… This is a generalization, of course, but maybe our parents’ generation or even their parents, like, I didn’t seem like that was as much of a thing and much of a culture where people would sit down and talk at least. The beautiful part about your book, you speak quite a bit about your parents. I talk about mine all the time on this podcast. How do you think the perception of emotions has changed in the last couple of decades? What are sort of the biggest moving muscle movements? And then, more recently, like, what are we starting to understand about emotions that may not have been really understood in the past?

Leonard: Well, that’s a great question, and I talk a lot about my mother in the book who survived the Holocaust, and they had a very strong effect on her. And back in that day, when I was growing up in the 1960s, to feel that you needed help, emotional help, or if you are depressed or anxious or had some other emotional issue, that was something that people didn’t want to talk about and were embarrassed to admit. And they wouldn’t want to go to psychiatrist or psychologist. That was considered a black mark on your psyche for some reason. So, that has changed completely. Now, I think people are very open about talking about seeing therapists, having therapists, and getting help. Not just getting help if you’re somehow pathological issue, or you suffer from severe depression or some debilitating disorder, but even ordinary people who need help sorting out their lives. They freely go to therapists and talk about it, and I think that’s a great thing. One of the lessons you learned about emotion is that it’s very bad to suppress it, that if you do have excess emotion in certain areas, there are ways to regulate it, but suppression is not a good one. And that one should actually more often go with your emotion rather than run away from it and see how it can be incorporated into your logical analysis. And in fact, it must be because that’s how it works. So, that has changed a lot since back then. I don’t know if writing a book that I did emotional and publishing it in the ’60s, maybe people would get secret copies and read it under the table or something. And maybe, the breakthrough book came around 1990 on emotional intelligence, where people realize the importance of emotion, which was really the point of that book. And in some ways, this is an updating to that because we’ve learned an awful lot since then because in addition to it becoming, let’s say, respectable to talk about emotion, our view of emotion has been totally changed since those days.

Throughout most of Western history, emotion was considered counterproductive and something that you should suppress, avoid, something that gets in the way. Charles Darwin, who created the first scientific theory of emotion, believed that emotion was an artifact in humans, that it was important in animals for communicating to each other when there’s danger or for communicating their power to other animals and confrontation and so forth. But Darwin believed that since humans have logical reasoning developed in their brain, that we’ve outgrown emotion and that we should try to avoid it and have, “cold, logical reasoning.” And what we’ve learned is that that’s not true at all. The way to look at emotion is that your mind is a information processor, not a computer of the traditional type, but still an information processor that takes in data about your environment, whether it’s the temperature around you, or noise, or someone talking to or whatever it is your situation, whether there’s enemies, predators around, whatever it is, all that’s coming into your brain. And your brain is processing it in light of your past experience and your knowledge and your beliefs, and it’s trying to spit out a output, which is “What should I do?” And as your brain is processing this, it’s using logic. It’s going if A implies B, and B implies C, your brain knows that A therefore implies C. So it’s using logic, but it has different modes of reasoning. It has different ways of processing the information, depending on your emotional state.

For example, if you’re walking down a dark street, and you’re in fear, your brain will pick up any little sound that otherwise would not even register. You wouldn’t know that you heard it. I mean, the sound would go in one ear and out the other and not even reach your consciousness. On the other hand, if you relax laying by the pool, that sort of thing won’t register with you. If you’re walking down that street and you have low blood sugar, you may not be aware of being hungry because your processing of your brain is focusing on some data and ignoring other data. And that’s what emotions do. They cause you to attend to certain things, certain data, to value it, give it certain importance and ignore other data. It emphasizes certain beliefs and experiences from your past and de-emphasizes others. And then, as your A to B to C logical processing is going, it’s working on all that, so they work together. But you can no more separate emotion from rational processing, then you can separate the CPU of a computer from its memory, and its RAM, and all the data that it’s working on. So it all works together. That’s what we’ve learned in the last 10 or 20 years.

Meb: Yeah, I mean, you have a great quote in the book… “Emotion is not at war with rational thought, but rather a tool of it.” And I was thinking about this as you’re just now talking about feedback and other things. I’ve never had like a career coach, but a friend was like, “Meb, you should think about chatting with this person. They’re amazing.” I said, “Sure, I’m open to it.” And I was talking to another friend as I’m thinking about getting a coach, and they were like, “Why?” And I said, “Well, I don’t know, you have a golf coach. You have a Spanish teacher. Like, I don’t know that many friends that are CEOs. Maybe I could have it.” But I’ll tell you something funny. First thing, he sent me like a personality quiz, and I haven’t gone down the road yet. But I filled out the quizzes you had on the book, listeners.

So there’s a couple of great personality. That’s right framing of how you would say it. And I was like, “Can I use just Mlodinow’s?” And he’s like, “What book are you talking?” I was like, “Oh, the book’s not even out yet.” He’s like, “Yeah, I’m going to send you my answers from this, so I don’t have to do it again.” But I thought it was fascinating. We’ll get to that in a minute. But I think the thing that really hits home for me is, first of all, being aware of emotions. You talk about in your book, animals have emotions but aren’t necessarily aware of them or can act on them, like, the cat can’t pretend not to like its food. So some of these examples. And to me, that seems like that’s the next step of how do you integrate or understand times when they’re working against you versus you can utilize them. Any good practices you’ve built up or ideas from the book on how we can improve that is like the first step to say, “Okay, I want to at least become aware of these feelings and emotions.” How do you approach that whole integration topic?

Leonard: Well, first, I would say that the cases or emotions get in the way, unless you have an issue, in a certain, if you’re someone who’s highly anxious or depressed or have a psychological issue. For most people, emotions are almost always productive, not counterproductive. The cases where they are analogous, to say, in the visual system or there are optical illusions, barrages that you see, cases in which your eyes or your ears get tricked. Those do occur, and they get a lot of press when we have a spectacular results, or in our lives, we think about them when they had a particularly dramatic outcome. But almost in all cases, your emotions are helping you. In fact, I talk in the book about how you really need feelings to even get out of your chair. If you didn’t have a desire, pleasure, or pain or a reason to have a motivation, then you would sit there. When you program computers, you realize this. If you were programming a robot, that the robot would just sit there unless you gave it certain emotion system. I mean, you could tell the robot, “Start listing cases,” in which the robot should get up. If a bell rings, get up. If there’s a fire, get up. But you’re never going to hit everything. You’re going to have a huge pointless encyclopedia of stimulus response rules for your robot, and it’s never going to work right. But with an emotional system that is natural, that motivation that creates that. Emotions are very necessary. I just want to keep emphasizing that for anything that we do.

In my book, I talk about mindfulness and the importance of recognizing this effect that emotions have on your thinking and this aspect of emotional intelligence, which is to be aware of what’s going on. And if you detect that your emotion is going off rail, which could happen, for instance, in extreme situations… that’s usually when it happens because the emotions are not necessarily made for extreme modern-day situations, like I talked about the airplane that crashed because the test pilot was in an airplane, and it was vibrating so violently. He made some errors in calculations and mental calculations, and it caused it to crash. But generally, those are very extreme situations. But if you do detect that you have an excess doses of that or functioning of that, then I talked in the book about the kinds of emotion regulation procedures that you can use, and there’s a number of them that have been very well studied in the last 10 or so years. And again, I want to emphasize suppression, which is the one that most people try to use, which is “don’t think about it” or “avoid it,” “bury it” is the worst of them. But there’s a series of different things you can do to mitigate them when they go off rail.

Meb: Arguably, one of my favorite stories in the book, which is actually funny because it relates to Wednesday is my podcast recording day, and I do too. And I was chatting with a multibillion dollar hedge fund manager earlier, and he started talking about Epictetus, if I pronounced his name wrong, I always murder it. I was like, “Oh, I was just reading your story about Epictetus in like one of your pieces.” He’s like, “What are you talking about?” It’s like, “I don’t know if I’ve written about Epictetus.” And I was like, “Really?” And then I thought about it. I’m like, “Oh, crap, that’s for my later podcast.” I was like, “I’ve never even heard Epictetus come up in my 40 years on this planet until today, and it’s twice.” But there’s a great story about a prisoner of war that used the outlines sort of three of these approaches with acceptance, reappraisal, expression with Stockton going down. It was, I think, the Vietnam War, maybe Korean War, that I thought was a beautiful illustration about the framing of that and how let someone survived seven years of hardship, not just like a day or two.

Leonard: He happened to have been a fan of Epictetus or Epictetus before he was shot down. So, the basis of that is really, and I’m going to oversimplify, so I apologize to philosophers out there. And I also oversimplified in my book with Stephen Hawking, “The Grand Design.” I got a lot of letters about it. Anyway, taking a chance with the philosophers again. The main tenet is not to try to change things that you have no control over. I like one example I use in the book where I say, “If it rains and you’re having a picnic, you don’t get mad at the rain. You don’t get angry at the rain, but you get angry at somebody who does something to harm you or piss you off.” That stimulates that motion. But often, you can’t change that person, and you have no more control over that person than you do over the rain. So it’s kind of equally silly to be mad at that person versus being mad at the rain. And Stockdale, when he was prisoner of war, realized that, and instead of being angry and instead of fighting useless battles he was going to lose with his captors, he exercised acceptance. He worked on accepting his situation, doing his best to do what he could given the situation, which was very harsh, a lot of torture, beatings, lack of food, and bad conditions. And he worked on accepting that that was his situation and doing the best he could within that. And others who didn’t accept it, who reacted with anger, rebellion, who tried to change things they couldn’t change, often became discouraged and didn’t survive as well as he did. A lot of them died. And he said, “I think at one point that, especially the optimists died because they kept saying, “Surely, by Christmas, we’ll get out,” and then they didn’t get out. “Surely, by Easter will get out,” and they didn’t get out. “Surely after two more years, this war will be over,” and it didn’t end. And eventually, it broke them. But by accepting his plight, he was able to survive and then live decades longer after he finally did get out. And Stockdale was in for even longer than McCain. Yeah, I think it was seven years.

Meb: It reminds me there’s another Podcaster, Jocko Willink. He’s a former Navy SEAL. He has a very simple way to think about this. When presented with a tough situation, his response has a very quick, sort of heuristic on how to think about setting the mind right, as he often responds with just the word “Good.” Like, “Hey, you got fired?” “Good, now, it’s time to find that new job you always wanted.” Or like, “Hey, it’s raining.” “Good, we can sit home and read the books we’ve been meaning to do.” Or “Hey, we got into a fight tonight with your spouse?” “Good. Like, let’s have this chance to unearth issues.” So, it’s just like a way of saying instead of immediately reacting in a certain way to acceptance and then trying to pivot it to being a force for positive thinking to the future, but it combines with us. It’s like combines acceptance of what’s happened and then moving on to how we can improve it.

Leonard: Well, what he’s doing and by acceptance means, “You accept what you can’t change.” But the corollary of that is “Focus on what you can change.” So, yeah, focus on improving the relationship with your wife or coming home and improving your situation by going indoors and reading, rather than crying about the rain, and so forth. So, yeah, it didn’t cause a certain action that you’re taking that is an action that’s possible within the constraints of the bad thing that’s happening. That is a positive thing.

Meb: I have one that’s been hard for me, which was, I really want to spend less time on my phone, and I can see how addictive it is with myself and everyone around me, and got to the point where I was telling my wife and others. I’m like, “Look, if you see me on my phone, like, say something. And for the first number of times they said it, I was like, “Well, no, no, I just had to do this one worktext” or “No, no, no, no, like, sorry, the market’s going crazy today.” And then, I had to finally eventually say, “You know what, all right, I need to immediately respond with something else, which is that I just started saying, thank you.” All right, thank you for reminding me that I don’t want to be doing this to help me improve, and it’s actually really changed the behavior. So it’s like, accept that, yes, I’m on this too much, and I want to move on anyway. It’s a work in progress.

So writing this book… and I think there’s probably no better effort than writing a book or teaching something to really get deep in a subject. Has anything impacted you in a particular way where you sit around and think, “Okay, I’m going to start implementing this in my own life, or I think this is a great way that humans should really be thinking about relationships with each other, their approach to life, whatever it may be… just their emotions in general that people don’t do. You mentioned feedback, which I’ve been also work in progress slow to develop, but I’m trying. Anything come out in the process of putting the book together and publishing it?

Leonard: Well, you realize that you understand people better. I mean, not just yourself, which is important, but you understand people better and their decisions. And, for example, your wife, you want to convince her to do something. And you go, and you think about bringing up certain questions, a certain issue, but she’s in a certain mood because she’s frustrated. That’s feeling the emotion of frustration because of something that happened earlier. And I realized that given the same data that I’m asking her to process when in a mood of frustration, as opposed to a mood of, say, joy because something amazing has just happened. That that same information would be processed differently, and the conclusion that the person reaches would be different. That’s a very simple example. But I remember in my old days in the corporate world when things were a little bit more subtle and complicated, that would have been very good for me to have realized a little bit more about how when I’m proposing to my colleagues or my boss, is not just going to be analyzed on the basis of what I’m saying right now, but will also be analyzed on the basis of what she has been experiencing that day or that last hour. And to try to be sensitive and aware of that and then you understand better how the person might react to what you’re saying. So, one of the lessons is that don’t expect people to react just to what you’re saying. They’re reacting to what they’re feeling at the time, which may have nothing to do with you.

Meb: There’s so many little examples in your book and elsewhere that I think are instructive here, and it’s almost like we all need a behavioral psychologist on retainer or maybe like a no card, maybe it’ll be like the Mlodinow’s AI assistant in 10 years. They’ll just sit on your shoulder and say, “Before you do sentencing as a judge, you need to eat a Snickers bar” or whatever it may be. But like, there are very real impacts. How do you think about particular audience is interested in the world of finance and investing where no place does emotion often create more havoc for people? Often, when we talk about the benefits of having an investing plan as a way to keep you in the guardrails, but emotions, and when it comes to money, in addition to being a taboo subject, like emotions, it’s one that is emotional. So, you’ve written some various stories about this area, any general guidelines, ideas, suggestions when it comes to thinking about money and finance with this emotional tie-in?

Leonard: I talk in the book about a study by a guy named Fenton-O’Creevy and his associates in England where they studied, I think, 100 plus traders working at four different investment banks in Europe and the States. And they really dug deep and spent time interviewing, observing them and having them answer questions, and so forth. And then, they got from the supervisors the ratings of these traders, so they could look for correlations between their emotional approach or emotional life and their success. And it was very interesting what they found in this huge study, which was that the ones who are less successful tended to suppress their emotions, then denied the usefulness of emotion, tried to avoid emotion. And the ones who were the most successful did the opposite. They embraced their emotion. If they felt that their emotion was getting the best of them, they tried to apply these methods, especially the one called reappraisal. But they, generally, tried to let their emotions guide them because they realized that one thing your emotion does is it encodes your experience from the past. So, when they reach a certain situation in a trading day, and they need a fast decision, and it’s high stakes, just like maybe a human being in the wilderness tens of thousands of years ago might encounters situations of that kind of drama and importance all the time, I suppose. You’re trying to make a rational decision based on what you know. But what you know in your brain from your past experience and your memory is such a large store and complex data set that your conscious mind can’t really handle that processing, at least not in a quick manner. And there’s a lot of studies about how limited our conscious processing is. But what happens is on the unconscious level that processing is happening, and it’s stimulating an emotion. Emotion is the messenger telling you, “This is dangerous” or “This is an opportunity” or whatever it is.

So, they understand that they should listen to their emotions and not try to ignore them, and they did much better in the trading. So, here’s a situation where we have a context or a realm money, where we say, make rational, or make objective decisions. But no emotions are very important there. And as a physicist, I was happy to include another story from my field about a very famous physicist named Paul Dirac, who was one of the top handful of physicists of the 20th century and one of the pioneers of quantum theory and a very shy and retiring guy and amazingly brilliant, even beyond his amazing accomplishments. He was just someone that everyone recognized as being a genius. In his later years, people would come to him and ask him what his advice was for budding young physicists. And he said, “Always be guided by your emotions.” So this guy was the Mr. Spock or the data of the physics world. He was considered to be that type of personality and very accomplished and brilliant. And yet, he saw that the most important thing in figuring out what a problem to attack, how to attack it, and having success in physics was to listen to your emotions.

Meb: It reminds me of what you’re talking about earlier, talking about other writers. The show “Billions,” I think, portrayed this in a pretty interesting way with hedge funds having psychologists or therapists on staff, you know, one of the highest-paid parts of their business. And this is very real world. Companies famously have therapists that the traders can talk to in a way to address kind of exactly what you’re talking about. But the concept of getting them out and working with them versus just internalizing it, which seems to almost never be a good solution to anything, really. As we think about emotions, and I’m kind of going back to “Drunkard’s Walk” and thinking about randomness and trying to think about world events. There’s been no more emotional events in a while than straight-up pandemic. And seeing a lot of experiments play out not just monetary and fiscal policy, but sociological experiments of being in quarantine, being in places. I assume there’s the good side of a pandemic, which lets you write a book in relative peace, like, “Oh, this is perfect. I’m going to have sabbatical. I’m going to crank out a couple books, and I don’t think I wrote a single page.”

Leonard: Oh, good for you. You must have found other things to do.

Meb: Yeah, well, we did a little road trip, but that was about it. LA, we got a lot more open space out west with some family. But as we think about just where we are in 2021 with news and emotions, you know, I have appreciation for narrative and how certain messages are intentionally, or not… unintentionally amplifying. Example you gave in the book about Facebook and how the stories being negative or positive and how they got amplified and impact it has. What are your thoughts on just like the world today, like looking at some of these giant experiments that may not have been possible in history, like, in these platforms that have a very real impact on people’s day to day existence and emotions and connections that digital world or just anything that’s on your brain about that topic?

Leonard: I explained in the book how one reason that we have social emotions is to help us interact with each other and cooperate in a group. Humans evolved in groups of 25, 50 individuals wandering nomadic tribes. They tended to kill each other if they ran into another one, but they tried then to help each other if they stayed in their own group. And even before language developed, there had to be ways of the individuals knowing what the others thought and supporting the other. So, if you feel pain, and your cohorts in your nomadic group don’t feel the pain, they might just let you go, and you might die. Maybe they could have helped you get through this. But if you’re feeling pain makes them feel pain, and then they’ll come and help you, other emotions also feed into that affection or love. But that’s one way that people tended to cooperate and get along together and help each other, which is by having emotional contagion and having a tendency to share the same emotions.

I remember one actor talking about how if he saw someone else about to hit someone with something, he felt that pain before that person, like, you’re going to stab someone, and then you feel that pain. Just watching that happen, you cringe. And what happens in social media, of course, is it’s a very unnatural in the sense of our evolutionary upbringing, an unnatural, artificial situation that we didn’t evolve to be in. It’s something that came up very suddenly, and our evolutionary selves have no response to that or haven’t had one yet. That’s way too soon. So, we’re in this unnatural situation, and the emotional contagion gets amplified because, you know, nomadic tribe. You’re interacting with a couple dozen other individuals. And even in the societies that have grown up pre-internet, you’re probably interacting in general with 50 people, or how many people did you see in a day or talk to on your old phones. But now that we’re on our phones all day with friends all over the world or people we don’t even know sharing things on Instagram, Snapchat, and Facebook or whatever, we’re suddenly in contact with a lot of other people. So, contagion can go viral and can really be amplified in a way that never could before. Also, the media has picked up on it. I think Fox News is very focused on fear. So people, if you watch the news, you hear a lot of things to stimulate fear of this, fear of that. And that all gets amplified when people are watching that and sharing that. And then, it comes out on social media, and it all works together to blow that up.

So, I don’t know if I have a moral of that story where I want to make a moral or make a judgment on what that means for society. It’s just something that I’ve observed that emotions through social media and in particular fear through social media and traditional media tend to get amplified and spread in a way that they really didn’t in the past. So, that’s a new element of our society.

Meb: One of the weird examples in the book was the case of the girls. And you mentioned, this has happened not just once in history, but many times where she developed, I think, was like a facial tic or some sort of paralysis. But then, it spread to like a dozen of the friends. And they were like, “Is it something in the water?” or “Is it something but this mutual psychosis?” I was like, “That can’t be real.” And then, I was like, “Oh, my God, that’s crazy,” where you can understand. You can start to see where there’s like little emotions that you’re surrounded with really positive, happy people and vice versa, that it’s contagious. Like, that’s one everyone understands, but then to an extent like this, I was like, “Wow, that’s really impactful.” Like, that’s very real. And then, you realize how it gets magnified on things like Instagram, TikTok, and everything else. That is a very real thing.

Leonard: Yeah, and it was really surprising to me that story and similar ones that you can have such stark physical manifestations that are just emotional contagion, as you say. We know, and there have been a lot of studies showing that if your group of social contacts has a higher level of happiness, it tends to make you happy and vice versa, but that you can actually get a facial tic from them was really striking.

Meb: You know, we talk on the podcast a lot, I say, publicly markets investing so much of the news flow is negative and noise, like, it’s just bombarded. You watch CNBC. You watch Bloomberg, you know, listen to a lot of podcasts. And it’s all just like inflation and anxiety, and what’s Gold doing or stock’s expensive. What’s blah, blah, blah, all the geopolitical events. And so, we always try to counsel investors to have a plan and put it kind of on automation. But the flip side of that is, actually, in the world of startup investing where you’re continually exposed to companies that are new and trying to change the world and enthusiastic and growing, and it’s a very strange barbell where the future’s bright, and skies are sunny and optimistic. Maybe it’s just because they have a ton of VC money, and they can’t help but be optimistic. But it’s an interesting foil or opposite to what so many of our investors get exposed to on a daily basis with public markets, which can be… I mean, it’s a Fed Day today, so already, it’s just a mess. I loved your book. I’m not going to spoil it with any more stories. Listeners, check it out. Take the quiz. Learn something about yourself. I was reading to my wife the entire page on shame and guilt last night. It’s worth the price admission alone. I don’t think I really understood the nuance differences, but I’m going to have to go read it again to really let it sink in, but it was insightful. It was something that I think I didn’t know before reading the book. And certainly, listeners, make sure you read the intro and epilogue with the book. They’re very touching as well. Leonard, as you look to the future, what’s on your brain? What are you thinking about? What are you excited about? What’s got you excited? What’s got you depressed and worried? Anything going on in the physics world? Are there aliens out there? What’s on your plate?

Leonard: There’s a lot of exciting stuff going on in the physics world and just waiting for all the breakthrough. You know, physics moves very slowly, something like the Higgs particle was thought of in the early ”60s, and it was until five or six years later until it was used in its current form. So, it can take years. But there’s a lot of exciting stuff going on. First of all, we know that, and this, I’m sure all your listeners know that dark matter and dark energy are mysteries. And I really feel that looking at these to be less and less, like, the answer will come from minimal kind of extension of our current theory called the Standard Model. It just seems like there’s new physics that will maybe help us revolutionize things, but there have also been some other anomalies that have been found recently. I don’t want to say anything technical, but having to do with an electron and a particle called the muon that really don’t match the predictions of our current theory. Literally, trillions of processes have been measured, observed. And the standard model that was developed in the late ’60s, early ’70s has withstood every test.

Now, there seem to be these two independent results that seem to show that maybe there’s something more there. And again, we don’t know what it is. It might be a new force, new particles. Maybe they can be fit in in a more traditional way, and it’s just going to be an updating of the Standard Model. Or maybe it’s going to be something completely different. But these are the kind of exciting things that are coming from physics, and again, in neuroscience, because I write my books about physics, math, astrophysics, and so forth, and also psychology and neuroscience. So, in that field, I’m also a little tuned in, and we’re discovering also amazing things. Our technologies have been advancing so fast. I mean, if people haven’t heard of optogenetics, you probably will soon. That’s going to be a Nobel Prize, for sure. And we can actually get into animal brains and turn on and off individual neurons now. This also works on something called a connectome, which is studying how neurons are connected. It turns out to be, I think, far more of the key to how our brain operates as we used to think the individual structures like the amygdala, and it’s really… learning that anatomy is good, but until you understand the connections and like the connectome of the brain, you don’t really know what’s going on. So, that’s all getting to be very fascinating, and we’re making more advances in the biochemistry, knowing drugs that will affect people and how they work. There’s the transcranial stimulation that people are working on where they put electrodes outside your skull and can electrically manipulate your brain.

Meb: You’re not just talking about the hat you can buy at Sharper Image that grows your hair back, right?

Leonard: And there are some things online that I would necessarily recommend that I wouldn’t say Sharper Image may have something like this. I don’t think it’s there yet. And in fact, my friends at Caltech would tell me that they think that some of the experiments on them are… maybe they shouldn’t be considered safe, even though they are and people are doing them. So, you got to let that technology go a little bit, but it’s fascinating potential. So, there’s a lot of stuff. I mean, I’m not a geneticist, but of course, that area is artificial life creating DNA, creating living things, cellular living creatures. I mean, it’s amazing to live today and to see how much is happening. I mean, I wrote my last book “Elastic” as a response to that because knowledge is increasing exponentially. The amount of knowledge you have that you’re going to create in the next day is based on the amount that’s been done before. So, when there was nothing done, it was hard to create something new. Now, there’s so much done, we’re creating newer stuff based on that, and it’s just taking off in an exponential manner. It’s crazy. I can’t keep up with nearly all of physics, not even my field of physics, maybe my area of subfield that I’m working on. And it’s crazy, but I love to sit back and hear about what everyone’s doing, and I’d love to live long enough to see some of these amazing things come to fruition and change the way we think about everything.

Meb: Certainly feels like the future is bright and also going to be exciting and weird. There was a fun economic paper that is from someplace that I think most wouldn’t expect it to be, but it was from Vanguard, the investment manager called “The Idea Multiplier,” that we’ll put the show note links, listeners. But the topic was a lot of people will look at patents or other ways to try to gauge innovation, and they started looking at a history of the last few decades on white paper citations as a way of forward-looking insight into productivity growth in certain industries and sectors. And they found that there was a very real lead time before booms in certain industries in really high growth. And I’m going to massacre this, but there was like five industries that they identified as a potential explosion in that area. It was like logistics. So, you kind of think about everything that’s going on with self-driving, materials… biotech, obviously, in that world, and I’m blanking on the one or two others, but really fun paper. We’ll add it to the show note links. But it’s certainly exciting times we live in. I sent my wife something from one of your books. I don’t know which one, but it was a… I noticed you have your name on your book, but it was a reference to a study people had done with sending the publishers some old Nobel Prize winning books, but not saying who the author was. And then, they all got rejected. She’s an author. She’s trying to publish a book. And so, it was particularly close to home. I said, “Keep your head up. J.K. Rowling rejected 40 times Nobel.” But that was one of my favorite stories.

Leonard: Yeah, yeah. That was in “Drunkard’s walk.” Yeah.

Meb: So, you didn’t do this under a pen name. So, listeners, you can find it on Amazon. We’ll post the show note links. I would love to spend another four hours with you on all your books, all your topics. We’ll have to have you back one day. Where do people find you if they wanted to keep up? You got a website? You got a place to go? Twitter?

Leonard: Yeah, I have a website that I don’t keep up too well, but there’s stuff on there, leonardmlodinow.com. Have Instagram, Twitter. I think it’s all @lmlodinow, so my first initial and my last name. I keep it up and not as much as I should, but it’s just… I like to spend my time writing more than marketing, but I also share stuff on there. So, that’s where they can find me. Of course, the books are everywhere that sells books.

Meb: Leonard, it was a blast. Thanks so much for joining us today.

Leonard: Thank you, it’s fun chatting with you.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at the mebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.





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