The New Way For Ordinary People To Build Wealth - Tony Robbins - #1153

Chris Williamson (0:00)

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You've written three books in this area. Why another one on finance? What hadn't you said already?

Tony Robbins (0:36)

Good question. I never even read the first book. In fact, I'd written a book for almost 15 years. I don't enjoy writing books. I like the variety and the aliveness of interaction, what happens. But when 2008 happened, I was really annoyed because I worked with Paul Tudor Jones, one of the greatest financial traders of history. I've coached him for almost 30 years. So I had some insights of what was going on. At the end of it, I thought, somebody is going to get punished, something is going to happen because a small number of people basically almost destroyed the world economy. What I saw was their reward or their punishment was we gave them more money. So about 2010, 11, 12, I started saying that something has got to happen here. I was mad because right now, the game seems like it's rigged and the average person thinks that they can't win. I went, oh, could they?

Since I've got access, I said, I'm going to interview 50 of the smartest financial investors in history, the most successful, the Ray Daly's, the Carl Icahn's, the Warren Buffett's, all of them, Paul Tudor's. I'm going to find from them whether the game is really winnable still.

I wrote this book, Money Master the Game. I want to write a book that my billionaire clients will be blown away by, but I could also, someone just starting the journey would do it. We were successful, number one New York Times bestseller, really great. But then people are not prepared for what happens. While I didn't know COVID was coming, anyone can anticipate the changes in the market. I wrote Unshakeable because I wanted people not to lose when the markets change and people that applied that got tremendous value. But then along the way, so many people are behind. They're so far behind in terms of their investments, in terms of the retirements.

How do you get there? Well, you got to get better returns, but usually requires bigger risks.

One of the people I became really good friends with was Ray Dalio, who's the greatest investors in history, they call him the Da Vinci.

And one of the days I met him, I was supposed to have a 30 minute interview, and four hours later we left. That's part of how we became friends, because I studied everything about him. But one of the final questions I asked him was, what's the single most important principle that you know of? If there was one principle to guide people, what would it be? Because I had now gathered all these brilliant people, and I'd come down to these core four things that everybody needs to do. Everybody needs to protect downside risk, and that's not what most people think about, right? The best investors on earth are all about don't lose money, which is so counterintuitive, but they do it by asset allocation. They don't ever put all their eggs in one basket. They know how to allocate well, so when they lose, they can still win. They know if you lose 50%, you got to make 100% return to get even. Most people don't do the math properly on their head. But the biggest thing I saw was asymmetric risk-reward. Then when they went to risk a dollar, like Paul Tudor, his goal is, if I think I'm making investment, I got to believe I'm risking a dollar to make five. Now if I'm wrong, I can risk another dollar to still make four. He could be wrong four out of five times and be in good shape. Whereas the average person doesn't think that way.

I met some people that did some investments like Kyle Bass, who you know Kyle from Texas. Kyle was following my work. He took $30 million and turned in $2 billion in 2008

How do you do that in a year, in the worst year of economics? He saw real estate and saw, everybody thinks it's going to go up and it's not. And so he risks basically 15 cents on every dollar. He could be wrong 15 times and still make money. And he made money. So I asked him at the time, just for Ray Dalio, I said, how do you teach somebody, this idea of thinking that you're taking huge risks to get huge rewards is not how you win. It's disproportion. I need asymmetric risk reward. How do you explain that to somebody who doesn't understand? He goes, well, Tony, since you say that, I want to explain it to my kids. So he said, I was trying to figure out how to teach it to him. One day I asked a question, what is a riskless investment?