The_Elite
00:00:00.000 | Hello everybody, it's Sam from Financial Samurai.
00:00:02.720 | And in this episode, I want to talk about being an elite.
00:00:06.120 | Because being an elite sounds great.
00:00:08.600 | You're at the top of your profession.
00:00:10.560 | Maybe you're the top politician.
00:00:12.840 | You're the top player.
00:00:15.000 | You're at the top whatever.
00:00:16.120 | So if you're in the top 0.1%, 99.9% of the people
00:00:21.120 | aren't there.
00:00:22.600 | So you feel special.
00:00:24.120 | And who doesn't want to feel special?
00:00:26.280 | I know I do.
00:00:27.140 | I know my kids do.
00:00:28.120 | We all want to feel special.
00:00:30.840 | But as I was writing a new post about the New York Times
00:00:34.840 | workers going on strike, I realized something very important.
00:00:39.260 | And that is none of us really should want to be identified
00:00:42.800 | as an elite.
00:00:44.480 | Because to be an elite means to be exclusionary
00:00:48.800 | instead of inclusionary.
00:00:50.440 | Any grade school student and every single parent
00:00:54.040 | understands the importance of being inclusive.
00:00:57.200 | We want to include people from different backgrounds,
00:01:00.240 | different sexes, cultures, races, and so forth.
00:01:03.560 | Because we want our kids to grow up to be kind,
00:01:07.200 | thoughtful, empathetic, not assholes, not racist,
00:01:11.120 | not bigots, not sexist, none of that stuff.
00:01:13.800 | Because we want them to be helpful to society,
00:01:16.820 | make friends, not be lonely,
00:01:19.000 | and just be good people overall.
00:01:20.600 | Makes sense.
00:01:21.860 | So if you are considered an elite,
00:01:24.320 | that means you are exclusionary.
00:01:27.500 | The more well-qualified people you can reject,
00:01:30.920 | the more elite your institution or you might seem to be.
00:01:35.520 | A great example of being exclusionary,
00:01:38.060 | yet telling the world that you want to help more people
00:01:41.820 | is the way top private universities
00:01:45.160 | have kept their enrollment the same.
00:01:47.320 | Very little movement over the decades
00:01:49.440 | despite demand surging higher and higher.
00:01:52.240 | And at the same time, the tuition rates
00:01:54.680 | are also rising faster than the rate of inflation.
00:01:58.040 | So as an elite university, you gain more elite status
00:02:02.280 | by rejecting more people.
00:02:04.440 | You keep the enrollment the same
00:02:06.680 | despite having 10, 20, $50 billion endowment,
00:02:10.440 | which could easily grow your class size
00:02:13.040 | and let more people in.
00:02:14.840 | But because we all want to feel elite or be elite,
00:02:18.840 | if you're an alumni or if you're a wealthy professor
00:02:22.120 | who can buy $16 million mega mansions in the Bahamas,
00:02:25.920 | you might want to keep the status quo.
00:02:28.080 | You might want to pull that ladder up from behind you
00:02:31.440 | so not as many people can gain
00:02:33.760 | the same amount of access and power.
00:02:36.560 | So do you really want to be identified as an elite
00:02:39.980 | when you're excluding other people
00:02:41.860 | once you've got to where you've gotten
00:02:44.320 | by the help of other elite people?
00:02:46.280 | I would say no.
00:02:47.160 | I would much rather be identified as a peasant,
00:02:50.960 | as someone who is intellectually inferior,
00:02:54.280 | but who can do what they want
00:02:56.040 | and who is actively helping other people.
00:02:58.920 | I've been talking about this topic
00:03:01.060 | regarding status, prestige for many, many years.
00:03:04.960 | And one of the reasons why
00:03:06.140 | is because I worked in investment banking
00:03:08.240 | and this industry, you got paid relatively well.
00:03:11.240 | So you had a lot of people
00:03:12.200 | who really chased status and prestige
00:03:14.440 | and who really couldn't quit the money
00:03:17.200 | even though they were miserable.
00:03:18.980 | It was just hang on for one more year
00:03:21.180 | and you'd make another several hundred thousand dollars
00:03:23.300 | or millions of dollars.
00:03:24.700 | And so this is a topic that's near and dear to my heart
00:03:27.740 | because it's very hard to quit the money.
00:03:29.820 | It's very hard to let go of the desire for prestige status.
00:03:33.900 | But at some point you've got to decide
00:03:35.700 | how much prestige and how much status is enough
00:03:38.420 | to take care of yourself and your family
00:03:40.740 | and whether all this stuff is really worth it.
00:03:43.540 | Because if you end up doing what society wants
00:03:46.000 | instead of what you want,
00:03:47.580 | you're gonna look back on your life with regret
00:03:50.300 | for not pursuing your passions and your dreams.
00:03:53.340 | I promise you this.
00:03:54.620 | So let's talk about the New York Times strike.
00:03:57.740 | People who write for the New York Times,
00:03:59.520 | who work for the New York Times
00:04:01.000 | are considered part of the elite.
00:04:03.140 | It is one of the largest publications,
00:04:04.840 | one of the oldest publications,
00:04:06.920 | and it commands the attention
00:04:09.060 | of millions and millions of readers.
00:04:11.240 | And so you might be wondering,
00:04:13.340 | if you are part of the elite,
00:04:15.060 | you've got all the money, power, and access in the world,
00:04:18.500 | and your kids are gonna have all the connections
00:04:20.860 | and access to the great schools and great jobs,
00:04:23.620 | why would you ever go on strike?
00:04:25.180 | You've got the best of the best that society has to offer.
00:04:29.420 | Well, it turns out, like most strikes,
00:04:32.820 | the main contention point is wanting or needing more money.
00:04:37.820 | The employees want more money
00:04:39.780 | and the company doesn't wanna give more money
00:04:41.740 | because the company, a publicly traded company
00:04:44.300 | like the New York Times, wants to minimize costs
00:04:48.100 | so it can maximize profits.
00:04:49.900 | Makes sense.
00:04:50.860 | So another epiphany that I realized
00:04:53.460 | from writing this article was that, hmm,
00:04:56.220 | no matter how much money, power, and access you have,
00:05:00.620 | you might always want more.
00:05:03.060 | So it goes back to the theme of how much is enough.
00:05:05.680 | You've gotta understand yourself
00:05:07.220 | to think how much is enough
00:05:08.740 | because we all run out of time.
00:05:10.300 | You know, I'm at 45 years old right now
00:05:11.980 | and I'm thinking, hmm, man, really?
00:05:14.140 | I could be dead in 25, 30 years.
00:05:16.500 | That, life went by quick.
00:05:18.680 | You wanna really figure out how much is enough
00:05:21.420 | so you can use your money to live the life that you want.
00:05:24.900 | So about 14 members of the New York Times Guild
00:05:28.100 | went on strike because they wanted a pay raise of 5.25%.
00:05:33.100 | Apparently, the New York Times offered half that,
00:05:36.720 | so 2.625%, and the Guild said, forget that.
00:05:41.300 | We're on strike.
00:05:42.380 | We're not gonna write.
00:05:43.220 | We're not gonna edit.
00:05:44.040 | We're not gonna do anything.
00:05:45.180 | And it's somewhat surprising to see
00:05:46.940 | that New York Times management
00:05:48.360 | isn't willing to offer a 5.25% pay raise.
00:05:51.760 | Supposedly, the writers haven't had a raise
00:05:53.860 | since early 2021, and they're looking for some assurances.
00:05:58.860 | And we all know that inflation is rising faster than 5.25%,
00:06:03.060 | so paying 5.25% increase for the next three,
00:06:07.180 | four, or five years doesn't seem that unreasonable.
00:06:10.820 | It seems kind of fair.
00:06:12.020 | You're still not keeping up with inflation,
00:06:14.360 | but at least nominally, you're making more money.
00:06:17.440 | So I totally understand where the Guild is coming from
00:06:20.740 | and from where management is coming from
00:06:22.620 | because they wanna keep costs low
00:06:24.960 | as the Fed-induced recession is likely coming.
00:06:27.840 | You know, the yield curve is majorly inverted.
00:06:30.560 | The 10-year bond yield is at 3.6%,
00:06:33.960 | and the one-year bond yield is at 4.7%.
00:06:36.320 | That's a major inversion.
00:06:37.900 | 90% chance a recession is coming
00:06:40.360 | within the next 12 to 16 months.
00:06:42.360 | At the same time, at the same time,
00:06:45.620 | would you really go on strike
00:06:48.080 | if you were an elite for a 5.25% pay raise?
00:06:52.280 | The company's offering 2.625%,
00:06:54.000 | so you're really going on strike for that delta,
00:06:57.000 | that difference of 2.625%.
00:07:00.760 | In other words, let's say you make $100,000 a year.
00:07:03.720 | Are you really gonna go on strike for an extra $2,625?
00:07:09.440 | That's tough.
00:07:10.560 | That seems kinda strange if you're an elite,
00:07:13.200 | if you're truly an elite.
00:07:15.040 | At the same time, if you're making, let's say,
00:07:17.040 | under $50,000 a year and you live in New York City,
00:07:20.040 | well, every single dollar counts
00:07:21.760 | because New York City is, in my opinion,
00:07:23.640 | the most expensive city in America
00:07:25.840 | and one of the most expensive cities in the world.
00:07:28.160 | So you wanna fight and you wanna show solidarity
00:07:31.300 | to your other 1,400 union members.
00:07:34.680 | I'm gonna side, I would say,
00:07:36.600 | 90-plus percent of the time with the employee
00:07:39.480 | because company loyalty to employees is dead.
00:07:42.320 | The world is just way too competitive
00:07:45.680 | for companies to offer pensions
00:07:47.920 | and take care of employees
00:07:49.480 | on the good times and the bad times, right?
00:07:52.600 | But it is also interesting that in investment banking,
00:07:55.960 | it's completely different from media.
00:07:58.460 | When we don't bring in the business,
00:08:00.920 | our compensation gets cut,
00:08:02.960 | and sometimes really drastically, 20% to 70%.
00:08:06.360 | I remember in 2011, I did very well with my clients,
00:08:10.560 | top three with most of my largest clients,
00:08:13.800 | and yet my compensation was still cut
00:08:16.200 | because management said I had to subsidize,
00:08:18.840 | subsidize the fixed income department,
00:08:21.080 | which was losing money at the time.
00:08:23.080 | And I was bummed, but I didn't complain.
00:08:25.840 | I certainly didn't go on strike
00:08:28.240 | because if I went on strike, they would have let me go
00:08:30.920 | or cut my compensation even further for the following year.
00:08:34.600 | So instead, I devised a way to get out,
00:08:37.760 | to get out and not complain at the water cooler,
00:08:39.640 | to just get out by negotiating a severance
00:08:42.360 | to be free to do what I wanted to do.
00:08:45.160 | There's another thing that I realized
00:08:46.520 | about the New York Times strike.
00:08:48.640 | So in 2011, there was an article that came out
00:08:51.960 | called "How a Financial Pro Lost His House" by Carl Richards.
00:08:56.040 | And the gist of the article is,
00:08:58.040 | Carl bought too much house,
00:08:59.900 | was underwater by more than $200,000,
00:09:02.840 | and decided to do a short sale.
00:09:05.000 | A short sale is an offer of a property at an asking price
00:09:08.920 | that is less than the amount due
00:09:11.040 | on the current owner's mortgage.
00:09:13.600 | Carl argued that while he had a contractual obligation
00:09:16.800 | with the bank, he had a moral obligation to his family.
00:09:20.720 | That makes sense.
00:09:22.080 | Therefore, he stopped paying his mortgage
00:09:23.520 | and handed back the property to the bank.
00:09:25.880 | But at the time, it was a really difficult time.
00:09:28.680 | I remember thinking to myself,
00:09:29.960 | ah, so here's a well-paid guy who is causing hardship
00:09:34.000 | for the rest of us who decided
00:09:35.560 | to continue paying our mortgages.
00:09:37.600 | Are we really the fools here?
00:09:39.260 | Are we the dummies?
00:09:40.100 | Are we the idiots for continuing to pay our mortgages
00:09:43.120 | when the economy was collapsing?
00:09:45.440 | Because if everybody kept paying their mortgages,
00:09:47.800 | the devastating financial crisis would not have occurred
00:09:51.400 | to the extent that it did.
00:09:53.800 | So I just, I remember in 2011,
00:09:55.840 | very tough because we were going still through like
00:09:59.040 | two or three rounds of layoffs a year
00:10:00.840 | after six to seven rounds of layoffs in 2009 and 2010.
00:10:05.720 | I also had a huge primary mortgage.
00:10:08.640 | I was like a million dollars still.
00:10:10.560 | And then my Lake Tahoe property,
00:10:12.160 | which I erroneously bought in 2007,
00:10:15.080 | was also underwater by several hundred thousand dollars.
00:10:19.600 | So compensation was rightly getting slashed.
00:10:22.680 | And I also wanted out.
00:10:23.680 | So it was tough.
00:10:25.080 | In Asian cultures, breaking a contract is dishonorable.
00:10:29.440 | So to see Carl's story get celebrated
00:10:31.880 | on a large platform felt off.
00:10:35.000 | And the more people who broke their mortgage contracts,
00:10:37.240 | the more the economy would suffer.
00:10:39.480 | And the article just made me feel dumb
00:10:41.960 | for doing the right thing.
00:10:43.800 | But I couldn't break my promise.
00:10:45.920 | So instead of being punished for not paying his mortgage,
00:10:49.260 | Carl Richards was rewarded by the New York Times
00:10:51.560 | with a regular financial advice column.
00:10:54.400 | Once he got that regular column,
00:10:56.360 | he got more exposure for his financial planning business,
00:10:59.520 | which meant more money.
00:11:01.480 | Then Carl was able to land lucrative book deals.
00:11:04.960 | This is a great example of heads you win,
00:11:08.040 | tails you also win.
00:11:09.960 | And I think it's part of being the elite.
00:11:11.560 | And kudos to him.
00:11:12.440 | No rational person would turn down such opportunities.
00:11:16.280 | And I am thankful for Carl Richards and the New York Times
00:11:19.200 | because they enabled me to believe
00:11:20.920 | that anything was possible.
00:11:22.960 | I didn't have to be perfect on my financial journey.
00:11:26.120 | I just had to be honest.
00:11:27.800 | And if I really messed up,
00:11:29.660 | I might even get handsomely rewarded.
00:11:32.560 | Think about that.
00:11:33.480 | If you do well, you'll likely get rewarded.
00:11:36.100 | If you do poorly, you might get rewarded even further.
00:11:40.440 | How do you not get pumped up with those odds, right?
00:11:43.520 | So the very next year, I left my job
00:11:46.000 | and I haven't been back.
00:11:47.480 | Finally, I wanted to share some inside baseball
00:11:49.960 | regarding the book publishing industry
00:11:52.040 | and getting on bestsellers lists.
00:11:54.800 | When "Buy This, Not That" came out,
00:11:56.480 | it became an instant Wall Street Journal bestseller.
00:11:58.960 | And I was pumped because the Wall Street Journal
00:12:01.400 | was the newspaper that I had been reading every single day
00:12:04.360 | since I started in the finance industry in 1999.
00:12:08.480 | And the bestseller list is based on a meritocracy.
00:12:11.080 | It's based on how many books you sell
00:12:13.680 | during a one-week period.
00:12:15.780 | However, "Buy This, Not That"
00:12:18.040 | didn't make the New York Times bestseller list,
00:12:21.080 | even though based on the number of sales, it should have.
00:12:24.600 | As it was explained to me by those in the publishing industry
00:12:27.920 | the New York Times bestseller list
00:12:29.440 | is not 100% based on meritocracy.
00:12:32.760 | Instead, there is an editorial committee
00:12:35.000 | that decides which books get on the list.
00:12:38.160 | And so the industry insiders
00:12:39.880 | went on to reveal several realities.
00:12:42.360 | One, the New York Times can do whatever they want
00:12:45.360 | because they are editorial.
00:12:48.120 | Two, if you work and write for the New York Times,
00:12:51.800 | you will most likely have your book reviewed by them.
00:12:54.840 | And if you write for the New York Times
00:12:56.360 | and sell enough copies in a week to make the list,
00:12:58.900 | you will most certainly be on their list.
00:13:02.120 | Four, first-time authors seldom get on the list.
00:13:05.440 | Five, finance is a harder genre to get on the list.
00:13:09.400 | And then lastly, I'm not a preferred minority
00:13:12.640 | as an Asian-American the publication fights for.
00:13:16.320 | It's just the way it is in America
00:13:18.160 | as the elites decide who gets an extra cookie
00:13:21.480 | or an extra helping hand.
00:13:23.120 | I wanna be rewarded based on the quality of my work.
00:13:25.480 | That's it, not based on my identity.
00:13:28.440 | In fact, it is partially due to my self-belief
00:13:31.200 | and the quality of my work
00:13:32.240 | that I decided to go out on my own.
00:13:34.280 | No longer could I ride on another institution's coattails.
00:13:38.320 | So if you have the self-belief,
00:13:40.160 | go out on your own and show the world what you got as well.
00:13:44.020 | There is nothing more satisfying and gratifying
00:13:47.200 | than creating something from nothing
00:13:49.200 | because of your efforts.
00:13:50.840 | Just know this, nobody really cares how you got there,
00:13:54.880 | only that you made it.
00:13:56.140 | So don't let honor and pride keep you on hard mode forever.
00:14:01.140 | Figure out the system.
00:14:03.420 | Maybe you've got the game, the system,
00:14:05.080 | so long as you don't do anything illegally to get ahead.
00:14:08.840 | Because once you become part of the elite,
00:14:11.640 | I think you get multiple second free passes.
00:14:15.300 | You can screw up many, many times
00:14:17.380 | and you can just try again.
00:14:19.120 | It's kind of almost like starting a business
00:14:20.760 | if you're rich.
00:14:21.680 | If you're rich and you fail, you can just try again.
00:14:24.800 | There's no devastation.
00:14:26.200 | But if you're poor and you try to start a business,
00:14:28.920 | you might only have one shot, maybe two shots,
00:14:31.680 | but likely only one shot until it's back to the salt mines.
00:14:35.440 | Yes, it's nice to feel special.
00:14:37.640 | However, you will ruin your life
00:14:39.520 | if you go too far in pursuing prestige.
00:14:42.320 | We all want some, we all need some
00:14:44.360 | for ourselves and our family.
00:14:46.080 | But like everything, there's a balance.
00:14:48.720 | Instead of doing something you like,
00:14:50.360 | you might end up doing something you hate
00:14:52.440 | because society deems it's worthy.
00:14:54.600 | And when you look back on your life,
00:14:55.880 | you might end up feeling full of regret
00:14:57.680 | for not pursuing your dreams.
00:14:59.920 | And all for what?
00:15:01.080 | So you can be part of an exclusive club
00:15:02.960 | that shuts most people out?
00:15:05.200 | I say forget about it.
00:15:07.120 | Instead, celebrate your middle class, average status.
00:15:10.680 | I think it's the best class in the world.
00:15:12.680 | And if we really wanna be an elite,
00:15:15.000 | be elite at giving away your time and money
00:15:18.200 | to help other people.
00:15:19.680 | Because the more inclusive you are,
00:15:21.960 | the better you will also feel.
00:15:24.480 | Financial Samurai will never have a paywall
00:15:26.720 | to listen to this podcast
00:15:28.240 | or read the articles on financialsamurai.com
00:15:31.280 | because I don't wanna shut out a poor kid
00:15:33.320 | or a poor family who wants to learn about personal finance.
00:15:36.480 | I'm not gonna create some ridiculous $2,000 e-course.
00:15:40.120 | That's just never gonna happen.
00:15:41.160 | It's so unaffordable.
00:15:42.920 | I'd much rather try to get an institution I believe in
00:15:45.920 | that's synergistic in supporting my work.
00:15:49.200 | So I say congratulations to all the elites out there
00:15:51.800 | for achieving great goals.
00:15:53.920 | It's not easy getting to the top of your profession.
00:15:57.160 | Don't let anybody discredit your hard work and talent.
00:16:01.280 | However, if you have to go on strike to make ends meet,
00:16:04.760 | perhaps the definition of being an elite needs to change.
00:16:08.600 | After all, what's the point of being so good at something
00:16:11.320 | if you can't even be properly compensated?
00:16:14.720 | If we are lucky enough to be at the top of our profession,
00:16:18.440 | the only thing I ask is for all of us
00:16:21.520 | to give others a chance to ascend as well.
00:16:24.840 | Let's not pull the ladder up from behind us.
00:16:28.120 | If we do, we might not have enough support to prevent us
00:16:32.080 | from when we eventually fall over.
00:16:34.640 | Thanks so much everyone for listening.
00:16:36.320 | If you enjoyed this episode,
00:16:37.480 | I'd love a positive five-star review.
00:16:40.080 | If you wanna support my work,
00:16:41.480 | check out Buy This, Not That at financialsamurai.com/btnt.
00:16:46.480 | I'll talk to everybody later.