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Choose from a great selection of digital coupons and use them up to five times in one transaction. Check our app for details. Ralph's, fresh for everyone. Radical Personal Finance, Episode 47. Welcome to the Radical Personal Finance podcast for today, Monday, August 25, 2014. Thank you for being here, you awesome people.

I appreciate you listening. I'm excited about today's show. Today's show is going to be an interview show. What can we learn about personal finance from poker, startups, and PhDs in computer science? I hope that tickles your interest. Today's show is going to be an interview with a listener. This listener, his name is Daniel Bernstein.

I'll tell you just a quick couple of tidbits on his story, and then we'll cut right to the interview. I'm excited for you to hear today's interview. Daniel actually was a listener to the show and emailed me and said, "Hey dude, big fan. Thought you might like to know something about my story.

I really like what you're doing and thought I'd tell you a little bit about my story." I said, "Let's get you on the show and let's tell your story." In his email, he piqued my interest when he said, "I did a PhD in computer science, worked in a startup, played professional poker, and then recently became financially independent and retired." This is very interesting to me, especially the poker angle.

I've wanted to have somebody on the show who's a professional poker player. I'm fascinated with the--and hopefully somebody that actually knows what they're doing, and hopefully this person would actually be someone who makes money at it. But I'm fascinated with the mindset that would go into being a professional gambler.

I've read a few articles written by professional gamblers and just totally really enjoyed them. So Daniel and I had a great conversation, and I'm excited to bring that to you today. I especially appreciated the fact that he's just a listener kind of right in the process. As you'll hear in the interview, I'm so tired of hearing certain people on the podcast circuit, and I love hearing from listeners, because what my vision is is that this show becomes a community of like-minded people who are all learning from one another.

And sometimes it's hard to listen to somebody who's way down the road. It's hard to learn from somebody who's many steps ahead of you. Frankly, getting financial advice from Donald Trump is probably not a very good plan for somebody who is making $10 an hour. I mean, it's good to take some lessons, and I'm not disagreeing with my own premise of the show.

What can we learn from the radical side, from the radical? But sometimes it's a little easier just to go to the next step and say, "Who's closer to my situation?" And so that's where I was excited to have Dan on the show as a listener. And I just want to up front, if you are a listener and you think you've got a story or you think you've got something that you'd like to contribute to the show, shoot me an email, joshua@radicalpersonalfinance.com, and let me know.

Thank you for all those of you who have been emailing me and telling me a little bit about your story, telling me a little bit about your background. I really appreciate it, and I'm really benefiting from that. I'm not going to say a word more. Here's the interview. So Daniel, welcome to the Radical Personal Finance Podcast.

I appreciate your making the time to be with me today. Thanks. I'm excited to be on your podcast. So give me a little bit of background. First of all, you are a listener of the show. How did you find the show, and then why did you reach out to me originally?

Right. So I found the show through Jacob Fisker of EarlyRetirementExtreme.com. I love that guy. I read pretty much everything he writes, and I was excited to hear that he was going to be doing a podcast. So then I started listening to your other podcasts, and it's all stuff I really enjoy.

I'm sort of a personal finance junkie myself, so that's how I came across your podcast. I just thought it would be really fun to come on and talk about my story. I think I have kind of a unique angle that I think your listeners might appreciate. So yeah, that's basically it.

Awesome. So share with us, what has been your story through the financial world? Share with us a little bit of your background. Sure. So as an undergrad, I studied computer science. I went on to do my PhD, continued to study computer science. At the time, I was really into artificial intelligence, and my specialty was automated decision-making under uncertainty, so decision-making in random environments.

Interesting. Yeah, I was into building robots that could learn how to walk or building an automated backgammon player, stuff like that. Just being able to feed a machine the problem and have it figure out the decision-making strategy. Ultimately, in the long run, I ended up doing a lot more human decision-making in random environments, but at the time, I was really interested in machine learning and AI and all that stuff.

So soon after I graduated, I found out that one of my professors was starting a startup, and it was a very early-stage startup, and I had the opportunity to join. This is sort of the first of, I guess, many gambles I took over the next decade. I had to decide whether to take the leap to join the startup and get paid only in stock, because there was no money yet, or go get a more traditional job where I would actually be paid a salary.

I did take the leap, and I worked at the startup for a year and a half. It started to get pretty old after a year and a half, even though their money was coming in and things were going quite well. I absolutely hated being in a cubicle, having a boss, didn't really like the work I was doing.

So I had to make another big decision to actually quit that job. What I ended up jumping off to was to be a pro poker player. Really? Yeah, I had been playing poker for fun for the past few years before that. It was really popular at the time, I got really into it, I was a pretty good player.

I knew there was money to be made, so I took a shot at it. Did that for five years. Some people were playing online, I actually chose to play in the casino. I much prefer that version of the game. I did that, after about five years, gradually the game started getting a little tougher, it was harder to make money, I started getting a little nervous about the very long-term prospect of pro poker.

So I went back into the startup world, worked at a later stage startup for a year. It was the same old story, I didn't like it, it was maybe a bit of a mistake. I guess another significant thing around that time, it was about 2013, beginning of 2013 I made a bet on bitcoins.

I guess it's significant because it's the first and possibly last speculative bet I will ever make. It was just sort of, everything came together at the right time. I have the background to be able to understand it, I saw how it worked. My wife who studies computer science also sort of understood that it works.

And yet there was a lot of fear and confusion surrounding it. So I said, "Man, I gotta jump in here, this one really feels right." So I made that bet, and over the course of 2013, the price went up, I got quite lucky. So that was great. Did you cash out?

Yeah, I ended up cashing out a lot, but I still hold some because I do think it's a good thing to have in the portfolio. Also in the years leading up to that, I had been studying this early retirement stuff, reading Jacob Fisker's blog. Really thinking deeply about my spending and how to be more efficient and find synergies in my life and all that stuff.

Basically all that studying combined with the money I made, combined with the money my wife was making in her career. She had a similarly varied career up until that point. You put that all together and soon enough we'd achieve financial independence. So that's where I'm at right now, just sort of enjoying it.

I started this blog, Awesome Secrets, where I can write about personal finance or things related to that, whatever excites me. Like I said, I'm a personal finance junkie. I have a passion for financial education and planning, just like you. I'm thinking about going somewhere with that, but I'm taking it slow and just enjoying things right now.

There's a huge need for greater education. I think everybody should have a financial blog and I think everybody should be a teacher. If for nothing else, you have a reason for learning. You have something to learn. I was reading a book this morning called The Birth of Plenty by William Bernstein.

My favorite thing about William Bernstein is that he uses writing as his way of learning. If there's a subject that he doesn't know anything about and he's interested in it, he'll go write a book on it. He just simply uses the process of writing the book to guide his own research.

That's one of the biggest benefits I feel to doing a podcast or doing a blog, is simply you have a guiding principle for your own research. You can research a topic, write about it, share that knowledge with someone else, and then you can help someone else get their start.

I think it's awesome. I say go for it. We need a lot of people out there and we need a lot of voices, especially in the unconventional strategies that may be a little bit possibly more effective than what's commonly preached. I'd like to go back to the startup. Let's start with more sequentially, because you've raised some fascinating, varying directions in your story.

Back with college, did you do a PhD right through, undergrad, master's, PhD, or did you work concurrently? How did you handle that process of getting a PhD in computer science? As an undergrad, I really got into the material that I was studying. Somewhere around junior year, I discovered this PhD thing.

I said, "Wow, you can just keep studying. You can just get even deeper into stuff. Eventually, you could be a researcher or a professor. I could build intelligent robots. That could be my life." I always wanted to have freedom. My idea of freedom back then was, "Wow, I can take this career path where I'm free to research the things that interest me." I later found out that it's not as free as it seems when you choose the academic path.

If you end up being a professor, you have to worry about grant money, teaching obligations, and other types of obligations. It's not totally free. Ultimately, I chose a different path. At the time, that's what I was thinking. I really loved what I was studying and wanted to do more of it.

I ended up spending seven years in grad school doing AI. It was really fun. How did you pay for college? PhD programs, especially in areas like computer science, you get research assistantships or teaching assistantships. You get a small stipend. I got paid through the whole time, a small amount, but certainly enough to get by.

Have you thought about leveraging your current financially independent status? Is that still an interest of yours, for example, to continue to learn about computer science and then just simply to teach online? To teach, I don't know, Salman Khan of AI? Is that something that's still an interest of yours?

At this point, I've accumulated a lot of interests, and I like to combine them all. I've got computer science, which I'm still passionate about, especially the math side of it. I've also picked up an interest in finance and gambling and all this stuff. I look at my blog now as my way of publishing papers.

If I was a professor, I would do conference papers, but now I'm just a free researcher that can write articles and post them. There's no peer review and nobody telling me what the subject needs to be. I do feel like a researcher, and I do think I'll get on to do some teaching at some point.

I envision it'll be a combination of all my interests. That's one of the things I've just thought about. I'm not financially independent yet to be able to live off of my investments alone. Having put myself there mentally, I feel like the major benefit to that is that it eliminates that need to censor your goals and need to censor things around where you can earn an income.

I always wanted my retirement plan when I was younger. I've been telling people forever. I always wanted to retire and go teach college. It seems like the perfect world to me to hang out with people who are interested learners, if that's the case. I have enough time working to be meaningful, but enough time off to not be consumed with work.

I look at something like you're describing, any of us. That's basically what I'm trying to do with the show, is develop a curriculum, develop and teach concepts, and just simply skip the whole go get a job at a university process. What a cool idea. What did you learn from the startup?

I learned a lot about myself. For me, it's tough to be in a situation where I can do a lot of creative and interesting work. Maybe I can make a company like a million dollars with some cool algorithm I come up with. The problem is I'm only going to see a small fraction of a million dollars, no matter what.

At best, I'm going to get a small percent raise. I might have some percentage of the company, but it's not going to be directly connected to the thing I'm doing. I have a lot of trouble with working for a salary. It's just not motivating enough for me. I want to be able to hit a home run, I guess, and be able to have that drive to do it.

I know a lot of people can be perfectly happy working in a regular job environment, but it's definitely a tough one for me. I get really excited about things. I get really passionate. Sometimes I just want to do something really big, and I feel like I'm putting myself in a box when I'm working for a company.

Even an exciting early-stage startup didn't do it for me. I pay attention to Paul Graham. He writes a lot about startups. It seems to me that Seth Godin put together a project one time of getting people together. It seems like working in a startup can be one of the most amazing educational experiences of all time.

I actually worked for about two months in a startup that a friend of mine had done, and it didn't work out. But I learned so much in that two months about myself and about business. It was an amazing, amazing experience. Just the essence of trying to create something out of nothing and seeing what goes into that has helped me to have been associated with that process.

It's helped me and every person that has gone through that, whether or not they cashed out for millions or whether the business went bust. It seems like it's in many ways a very helpful, defining process. In addition to learning about myself, in terms of business knowledge, I got a good feel for competition and how you've got to carve out a niche for yourself.

If you try and go compete with the behemoths, it's going to be really tough. If you're going into an area that's already saturated, you're just going to be really fighting an uphill battle. If you're just an individual or a small team and you don't have a lot of resources, you're going to have to find a smaller niche.

That was an important lesson for me. I don't try to do what's already been done too much. Just one of the major lessons that I've learned is that I think it teaches people, especially if you're working in a lean startup, where I just think of startup as new business.

I guess the hip word in the tech world is to use startup, but any business is the same. You can learn the benefits of staying lean, of targeting a market, and then using other forms of value other than financial capital. It seems like the primary benefit of a startup is you learn to build something that has value with the goal of getting funded, with the goal of selling out at some point, by starting with nothing but an idea.

It creates that process of saying, "I can have an idea. I can focus on a niche. I can reset when I find one that's a failure. I can build something that is going to have value literally out of nothing. I can create wealth." That's what business does. What a creative pursuit to then take on and recognize that at every stage of life, all of us can be creative and create something out of nothing.

We identify the niche and, like you just said, find out, "Hey, that doesn't work, but that's no big deal. I'll go on and try another one and find one that does work." We're back. What I was just saying was that the niche, just the benefit is that you recognize the process.

Then you can take that process and you can duplicate it in future times, the process of creating something out of nothing. I'm interested in poker. I've had some friends that have played poker. I've always wanted to talk with somebody who has done that for a long period of time and has made money off of it.

How did you start? You said you had an interest in it, but actually making money off of it. How did that process work for you? This was late grad school. A lot of my friends started playing because it got really popular. I was just playing at home games with people.

At the time, online poker had gotten really popular, and I started playing online. I just got really obsessed with the game. It's just really fun. I felt like I had the mathematical tools to be able to figure things out. I got way more into it than all my friends and ended up spending a lot of time just trying to figure out the game and playing the game.

It was all for fun, but I was making good money because the games were really easy at the time. I remember joking with my wife, who was then my girlfriend. I remember saying, "Wouldn't it be funny if I was a professional poker player? That would be pretty hilarious." It was a total joke because I was doing something serious.

I was in grad school. I was going to be a professor. I had serious research to do. I couldn't be going off playing a game, but it turns out that was actually more my true calling. I was just really into poker. I tried the startup thing because that seemed like a more legitimate, serious thing to do.

Eventually, I just said, "I've got to give this a shot and try to play professionally." I know some people are making money at this. I want to try it. It's too fun not to give it a shot. I remember thinking, "I want to be safe about this, so I need to have a backup plan." I said, "I'll be a pro poker player.

If I do it for a long time and it doesn't work out, I could always be a high school math teacher." Even if I have nothing on my resume, there's always going to be a demand for math teachers. That's a good backup plan. That was enough for me to say, "I've got to go for it.

I've got to pursue this dream." A lot went into it. There's no formula for being a pro poker player. Nobody's going to tell you how to do it. Most people fail. Very few people figure out how to do it. When you do figure out how to do it, it's very personal to you.

Everybody uses poker in a different way. For me, I needed to find a way to do it. I had a family, so I couldn't be chasing games around the country or the world and staying up all night. I couldn't be having a crazy schedule. I had to impose a lot of structure.

I had certain days when I would go down to the casino. I had a schedule. I knew from experience that I needed to establish a psychological structure. Gambling can drive you crazy. It can really mess with your mind. You might be a great player, but if you just go and do it without really thinking too much about it, things could get out of control.

You could end up making really bad decisions because your emotions get in the way. What I did at the start of my poker career was I wrote what I called the Constitution, which was a long set of rules of when I should quit. How much do I lose in a session before I quit?

What kind of preparation do I need to do? I created this huge structure. I made it into a real thing. I had this Constitution, this set of rules, and then I established what I called a board of directors consisting of my wife, my best friend, and my dad. After every poker session, the deal was I had to send them an email describing how the session went, the ups and downs, what I was thinking.

I imposed a kind of social pressure on myself. I knew I was going to be reporting to them, so I couldn't go off the deep end and do anything too stupid. Like I said, I made it into a real thing where there was accountability. The Constitution didn't stay fixed.

It evolved over the five years that I played because I would see what was necessary in terms of rules and structure. Doing this from the beginning made all the difference. Most people don't really understand what poker and gambling is all about. Sure, you have to have technical skills and you need to read the other players.

All that stuff is important. But what I've learned is the number one thing is managing yourself by far. You need to have self-discipline and self-knowledge and be able to introspect the whole time. If you can't do that, if you're not seeing yourself clearly, you're going to fail. Sounds like exactly what's needed to be a good investor.

Of course. I've got plenty to say about gambling and investing and how they're all the same thing deep down. Unfortunately, people don't have a great understanding of that. I'm obsessed with the concept of how psychology and our own inner psychology and the external psychological forces affect our own behavior.

I read a book, I don't remember the name of it, but it was written by a guy who was a well-known Wall Street guy. I can't remember his name right now, but he was going through all of the different investment strategies that work on Wall Street. He was very particular.

A lot of times people often say, "There's no investment strategy that works better than another." I understand that line of thinking, but this guy is a very thoughtful guy. He goes through all of these, there's about 40 different specific investment strategies. The key thing I took away from the book that he said is that the number one reason why an investment strategy works is because people stick to it.

He hypothesized that the reason why indexing has been such a successful strategy over time, the reason why something like the S&P 500 index or the reason why the Dow Jones index have enjoyed such consistent returns is because there's no emotion. There's a very clearly written, "Here's what composes our index, here's our investment strategy." But many of the other investment strategies that, in his opinion, also work, people simply haven't been stuck to over a long period of time.

People are always bouncing around. I see everywhere through the investment world the importance of behavior. I just reviewed a study last week that Bernstein Financial Advisors came out and they published this. It was all over the financial Twitterverse because it was such a startling chart. They used the Dow bar numbers for the average investment return of the average person from 1993 to 2013.

The average investment return for the average investor was just over 2%. It was the third lowest of any asset class. All of that is based upon behavior. Feel free to teach us any lessons you can from the world of poker because I see it as perfectly aligned, the importance of behavior and what we choose to do, and our ability to manage our emotions, follow a plan, avoid the emotional ups and downs when it comes to investing.

Share with us your wisdom, anything you have learned and applied to the world of investing. I can tell you a few things. One thing this makes me think of is a very common… What happens pretty much all the time in poker is that if players are losing, they call it being stuck.

They call it that because you're stuck in your chair. You're losing and you want to win your money back. You're not going to leave until you win your money back and make a tiny profit. Then people will leave. That's very common. People will stick around for hours, sometimes 10, 20 hours when they're losing.

They'll just keep on playing, keep trying to win it back. When they're winning, it's easier for them to leave and they book a win. People talk about booking a win. That is the exact opposite of what you want to do in poker. You want to book small losses. When you're losing, you are not playing well.

You're not focused. It's obvious when you think about it. Your judgment gets cloudy and everything. That's when you lose. You want to book a lot of small losses. When you're winning, you want to stay. Because you're winning, you are thinking clearly something is going right. Maybe you're getting lucky, but you're also going to be seeing things clearly and things feel good.

When I'm winning, I just let my stack grow and just keep on crushing the competition. When I'm losing, I might stay, but I'm always thinking it might be quitting time. I don't know what the secret is to get people to start doing the opposite of what they are doing, but it certainly is.

That's the way it works. Do you find that the majority of your stake, the growth of your accounts, did it come in a small number of games? Or was it more that when you were winning, you won a consistent amount and then you quit? Or was it 5% of the games is where you won 80% of your money or anything like that?

Do you have any idea? I think it's a bit more random than that. But definitely the way I approach it, I do end up having, like I said, I book more big wins and small losses. So a few big wins and a lot of small losses. That's just as a result of how I manage things.

It makes me think, well, A, it's exactly the sunk cost fallacy that I see everywhere. It's one of the most poisonous fallacies that we have, is the sunk cost fallacy where we can't seem to walk away once we've put money in. The example that I use to illustrate it is, let's say that my car has a transmission problem.

And I go and I spend $1,000 fixing the transmission. And then two weeks later, it has an engine problem. And I get an estimate that's going to be $1,000. Well, statistically, it's been proven time and again that it's much more likely that after spending $1,000 on the car, I'm likely to go ahead and want to make that up by investing the $1,000 into the engine so it keeps going.

But that is logically an absolute total fallacy because they're separate events. They're completely unrelated. And I should be making a fresh decision at each time. I should make a fresh decision about fixing the transmission. I should make a fresh decision about fixing the engine. But man, is that tough to do.

And I see this in planning for people all the time, is that what happens is that your experience, or at least your story in walking away from computer science to pursue some things that are not in line with what you studied is unusual. Because most of the time, we spend a lot of time studying something.

I've experienced this with physicians and attorneys, probably because physicians and attorneys invest so much time and so much energy into their education. And a lot of times, you find with a physician or attorney, they say, "I hate this. I don't want to do this anymore." "Well, why don't you quit?" "I can't quit.

I've already invested all this time and money into this degree." "Yeah, but if you know you hate this and you don't want to do this, stop." If you know that you don't want to do something, then don't spend any more time doing it. Now, you should work out a reasonable plan for how to change to something else.

It's intelligent to plan and design how to jump ship. But once you've recognized, "Hey, this is not the right fit for me," bail. Don't worry about what you've sunk into it, because it's all done. It's a sunk cost. It's done. It's gone. You're not getting that time. You're not getting that money back.

Make a fresh decision based upon where you are. Yeah. That also reminds me of just... I always think that there's not enough proud quitters out there. I consider myself a proud quitter. I've quit lots of jobs. I've quit lots of projects. I like abandoning stuff. I stay light on my feet.

I think there's no shame in that. Yeah, there's not. But yet, what happens is we're conditioned by our society, and I would say largely by school, we're conditioned to want to be part of the pack. So, in high school, were you a good student? Were you an A student or were you a lower student?

Yeah, I was a good student. Okay. So, what I experienced, I was a good student as well. Academics came easily to me. And you would get the 100% on the test. Well, what are you quickly expected to not do? You're not expected to not show that to anybody. So, every time I would ever get a paper handed back in high school, I would immediately cover up the score so that no one knew that I had gotten a perfect score or gotten an A.

And so, what happens is that it's conditioned into us that you can't be too good. You can't be too bad. You've got to be middle of the pack. And so, this conditioning over time makes it so that we are insecure about quitting the crowd. I had many people that went to college at a certain college just because that's where their friends were going to college.

I had many people join a career because that's what they're accustomed to. My dad was an attorney. My grandfather was an attorney. So, therefore, this is what I do. Very few people actually sit down and say, "I'm going to choose my career based upon understanding what my specific skills are, my specific values." Rather, it just kind of runs with, "Here's what I'm familiar with." And yet, when you look at and study success, you find people are willing to walk away from the crowd.

So, I think that's a neat story. It's neat to see. I love seeing parallels in different things. So, with building up your gambling, did you just start with the money that you had? Did you borrow money? Did it get to a point where you just played small and slow and kept investing until your pots got bigger?

How did you finance it? It doesn't take too much to have a bankroll to play. So, I had enough saved up that I could lose 10 buy-ins and be okay. And since I was a pretty skilled player, bankroll was never a real problem. Okay. That actually reminds me of another kind of lesson.

People think that something like going and being a pro poker player is a big risk. That's a real risky thing. And in some ways, it is. You have to have what it takes. You don't want to go years and actually be a loser and not really realize it. But in terms of the math of it, in poker you're making tons and tons of small bets.

And for the most part, they're uncorrelated with each other. And so, you've got the principle of the law of large numbers on your side. And this is something that I guess most people just don't really have a great grasp of this principle. That if you make tons and tons of small bets and they're all uncorrelated, and if you have an edge every time you bet, so if you have a slight advantage, then you are guaranteed to win eventually.

And so, the process of playing poker to me, to some people, would feel risky and unsafe. But to me, if I can identify that I have an edge over the competition, it feels very safe. Sure, there's going to be short-term ups and downs. But if I play full-time for a year, it's a mathematical fact that I'm going to win.

Whereas, if you put your money into the stock market for one year, it's more like making one big bet. And you may win, you may not. It's definitely more risky than playing in a poker game with an edge. Interesting. It makes me think of the difference between entrepreneurs and employees.

Employees think entrepreneurship is risky, in my experience at least. And entrepreneurs think employment is risky. An entrepreneur says, "Listen, you have one paycheck, one customer. That's the company you're working for. If you get fired, if you lose that one customer, you lose everything. I've got a hundred, ten, or a hundred, or a thousand, or a million customers.

If I lose one or even twenty of my customers, it's no big deal. Why would I place all my bets on one paying customer?" It's a reframing of risk. Yes. That's the way both my wife and I, over the last decade, that's how we have approached things. We've made a lot of bets, tried a lot of different things.

Some succeeded, some failed. But that's just how we do it. It's always been weird for me to be at a job with a salary. It's like I can't leverage the law of large numbers then. Now, you speculated on bitcoins, and you used the word "speculated." You were hoping for a broad-scale market adoption of bitcoins and a major increase in price, and then you had an exit plan.

Or you said, "Hey, I think bitcoins are awesome, and I want to own them." What was your philosophy behind choosing to speculate on bitcoin? I had originally heard about bitcoins in 2010. Somebody had told me about this, "Oh, there's this internet money. It's based on cryptography. It's really cool." I read a little bit about it.

I thought it was just a theoretical idea that was really interesting. I didn't think you could actually own them. But then in 2013, I started to see that WordPress was starting to accept bitcoin payments. I said, "Wow, this thing is actually becoming a real thing." I read a little bit more about it, and I was like, "Yeah, I get it.

To some degree, I understand the algorithm. I see that it's based on cryptography." Partly, I just wanted to buy some, because as a computer scientist, I felt like, of course, I should own some. This is a huge breakthrough, and I want to be a part of it. It was investing based on just pure interest.

But there was also this feeling of, from a gambler's point of view, I'm like, "Wow, this seems like one of the best bets I've ever seen." Because it's the perfect storm of something that works, and yet the amount of fear and confusion surrounding it is just absolutely huge. At the time that I first bought in, to talk about bitcoins with people, it was bizarre.

I talked to a guy who was actually a professor and actually specialized in networking. Even he told me, "Oh, bitcoins, those are mostly used by drug dealers online, and you don't want to get involved in that." There was just this ... I don't know, it's like I smelled blood or something.

Like I said, it felt like the perfect storm, and we only made a relatively small bet in terms of, I would never bet a lot of my net worth on something like that. But my wife and I both talked about it, we both got really excited and went for it.

There is a lesson I learned, though. I usually don't speculate on stuff like individual stocks, because I'm just super skeptical. I never think that I know what's going to happen. But there's another reason not to speculate, and that is that weird stuff can happen on the upside. There can be costs that you didn't anticipate.

You put the money in, if you lose, you just lose. But if you win, like what happened with bitcoins is I won too fast, and then I had to sell some and pay short-term capital gains. I never anticipated that. I also got scared that somebody was going to hack me and steal my bitcoins.

So I had to buy a computer and generate a private key and take all these precautions to make sure they were secured. And there was another cost. And so in the initial stages, when you're calculating the expected value of the bet, you need to take into account those upside costs, the intangible stuff.

So, yeah, speculating is not what I like to do. And I'm kind of proud of myself for having a success with bitcoins and not saying like, "Oh, now I want to invest in the next coin or some other thing." Not sort of getting my ego involved, just realizing like, "Okay, I got really lucky, but it doesn't mean I have any special talent here.

It's just maybe a once-in-a-lifetime thing." Right. It seems it's a good point. Have you ever read a book called The Richest Man in Babylon? No. Best personal finance book ever written, in my opinion. Check it out. It's a fun read, and it's one of the few personal finance books I can recommend without reservation.

I just reread it. And I think I had read it a long time ago, but I had completely forgotten how good it was. I just reread it, and I was just struck by how amazing it is as far as distilling the secrets of how to get rich into simple, actionable things that are system agnostic.

It can be applied whether you are in the U.S. or whether you're in Africa. It can be applied whether you're – I mean the book is written in the era of King Nebuchadnezzar in Babylon. And so in some ways it's so much easier to read. But one of the things that I noticed in reading the book was that he talks about you have to move when you see an opportunity.

And it's something that poker, I think, is probably an interesting – you draw an interesting parallel from poker and from your experience in that world over to the world of investing. And it seems like there's a balancing act between seeing something and just having the courage to move. In Richest Man in Babylon, he gives – they give this to – it's written in the form of this – almost this – what's the word?

Not – Socratic. Socratic method is written almost in the Socratic dialogue with the teacher and class, and they're talking about times they had an opportunity to get a deal and they walked past it. And they procrastinated and he was talking about how if you procrastinate when opportunity is there, you walk away.

Now, there's a difference between procrastinating when you see opportunity and just being stupid and avoiding a bad bet. But there seems to be that common thread with people who build wealth that they can look at an opportunity, think through the odds, see something, see that this is possible, and then take action and not dither around wishing that this is possible.

And then you see that there's a – at least my observation is that in many of the biographies of wealthy people that I've looked at, it seems like there's a – there are a couple of key points in their life, a couple of big bets that make a major difference, those speculations.

But then you quickly pull back and you protect yourself and then try not to lose again. And I have no idea how to teach that. I don't know. Maybe – do you have any ideas as far as how to teach that gambling mindset of take the bets, don't take a dumb bet, but don't be scared to move when the time – when you see something and you know the odds are in my favor, I need to play this hand.

Have you thought about that at all? Yeah. I mean it's a tough one. I think it's worth it for people to learn about fear and understand like the psychology of fear and the chemistry of fear and how like fear is like the number one killer of rational decisions. Like I think just having like really having that ingrained in you and understanding that like if you're passing on something, it could often be because of irrational fear.

Right. And I think that's one of the most common things. And so understanding fear, having a lot of reasons to not be afraid, a lot of backup plans, a lot of – I try to think about abundance a lot, thinking about what I have and even if I lose, everything will be OK.

I don't know. Just – yeah. Getting rid of that fear is probably a huge thing. Another thing from a practical perspective is you have to be available for the opportunities. So when I was quitting my last job, on my last day, somebody was asking me, "Why are you quitting?" I didn't have anything I was – in particular I was going to do, but I told them like, "Well, if I'm here and some amazing opportunity comes along, I can't take it because I got to go to work and do all my stuff." Right.

So if I'm free, if I'm at home and something comes around, I can do it. So I've got lots of free time. I keep a lot of cash in my portfolio. I'm ready to go when the opportunity arises. Right. So that's – you got to be ready from a practical perspective.

That's a good point. I hope you write an article on that. I've observed that if you have time on your hands and it's not pre-committed, there are so many spontaneous, wonderful experiences that can be had that you can't have if your time is committed. And are you familiar with a blogger named Tynan?

No. OK. You would enjoy this blog because he also played professional poker for a while and he still – probably what it sounds like you probably do, he still plays occasionally. But he spends most of his time coding a new blogging platform. His website is tynan.com. The interesting thing though is he writes about – he writes about taking – he likes – he travels a good bit.

But when he talks about how he gets his travel deals, the key thing that I see is that, A, he doesn't have a regular job where he has to be. He's single and he lives a mobile lifestyle so he can just get up and go in a moment. But he gets these deals sometimes that are just these crazy travel deals where he can fly from California – he lives in California.

He can fly from California to Asia for a couple hundred bucks. But the trick is, is that he doesn't get – he uses this one site. I can't remember it or I would give them props. But the trick is that he doesn't know until he clicks buy whether he's going to Japan or China.

So it's like they'll send him to either place and it's just one of these quick things that's available. Or that there's a deal that's offered but you can only work if you can travel midweek, Wednesday, Wednesday to Wednesday. And if you look at things like plane fares, if you're stuck in the world of employment where you have to go on – you leave on Friday afternoon and come back on Sunday evening, that's where your costs are the most expensive.

But if you can leave on Wednesday and come back on Wednesday and if you can change your flights and you can take the weird schedules, then all of a sudden your need for money goes down substantially. So I think it's such a valuable point that you make. Just having time and cash available for spontaneous, serendipitous experiences can be a valuable planning tool.

What's it like? What's it like being financially independent? What's your average week like? I wrote a blog post about this just to fill people in on what it's like. I used to be this way and I know a lot of people are this way. They have a hard time imagining what it's like to just be free all day and have no work to go to and stuff.

So a typical week, I will play poker sometimes. I'll go down on a Monday and stay overnight. They give me a free hotel room. It's great. Why do they do that? I've never understood that. Well, they don't really have sophisticated algorithms figuring out who are the winners and losers.

I'm probably not great for the gambling economy down there because I'm kind of sucking money out of it. They're just happy to have players come down. So I'm just a player. I think especially because I live a little farther away from the casino, they try to entice me with giving me a free hotel room.

I'd be going whether I got the free room or not, but they don't know that. I've never gambled, and I think I've walked through three casinos in my life. But my impression is that the bigger your hands that you're willing to play, the bigger the pots that you're willing to play, then they would assign you and be willing to give you more stuff.

But do they just walk up to you and say, "Hey, here's some free stuff"? How does the transaction actually work? Do you expect that they're going to give you a free room? How do you do that? How does it work? Yeah, so you get a player's card where they sort of track what you're doing.

So if you're playing the games like Blackjack and Baccarat, and if you're playing against the casino, you're going to get all kinds of perks because you're losing a lot of money directly to the casino. They're going to keep track of that using your card, and they're going to give you the comps based on that.

I play poker, which they don't make as much money off of poker. They take a small rake out of every pot. But it's enough so that we still get comps. You get the stuff mailed to you or emailed to you. I get an email every month. They say, "Here's your offers.

You get a free hotel room. You come down here. You show up on a Monday. We'll give you $30." It really feels like a dream sometimes. I'm like, "Really? You're going to pay me to come down here and sit there, and then these people are going to hand me more money?" I can't believe it.

It all comes down to benefiting from the fact that people don't understand probability and statistics, which is too bad, but I'm certainly able to cash in on that. Do you get bored playing poker at this point, or do you still enjoy it? I don't get bored. I think a lot of people, if they tried to play professionally, they'd get really bored because you have to fold most of the hands.

You're actually mostly just observing and watching and all that. I don't know. I've got something about me. I can sit there and just stare at the cards for hours and hours. I recognize that, and I'm taking advantage of that talent, if you will. Interesting. I interrupted your week. Keep going.

Is there a day of the week that you usually go down and play? Yeah, I usually go on Mondays. I don't know. I start the week off with a nice, relaxing gambling getaway. It seems like a good way to start the week. I don't know. Everyone else is going to work, and I like the contrast.

It's a good psychological tool to remind yourself of how good life is. "Look at all these suckers driving to work. I'm going to go play some poker." No, hey, everybody's doing their thing. It's fine. I'll come home, and then I take care of a lot of errands around the house.

My wife is busy doing more serious work. She's around the house, too, but she's a finance recruiter, and has to make all kinds of calls and do all kinds of serious business deals. So I take care of stuff around the house. I've been enjoying doing some writing. When the weather's nice, I go for bike rides, get outside.

Certainly, I love learning about stuff. I spend tons of time reading and studying things and all that. I've been spending a lot of time thinking about where I'm going to go with financial education and financial planning, what I want to do with that. This is something I think should be a thing.

Friday is my reflection day. I'll take some time on Friday to just reflect on the week. Look back at the ups and downs and lessons learned and all that stuff. I really think if everyone had a reflection day or half a day at the end of the week, it would make the world a better place.

But unfortunately, it's not a part of our culture. It's a common, interesting point you make. I notice it's a common theme in various circles. For example, if you study the world of productivity and how to be more effective with your time, one common theme is making the time to have a weekly review, where you sit down and you review your projects, you review your goals, you review your actions.

You just get organized and get refocused. If you go, I just listened to a Jim Rohn seminar when I was traveling last week. I listened to a seminar, and he was talking about, I think he said, "Take an hour at the end of the week, take a day at the end of the month, and take a weekend at the end of the year." Basically, just take time to recognize and chronicle and document the lessons and document the experiences that you've had in the past day, in the past week, in the past month, in the past year, so that you can use all of that information and all of that knowledge and all those experiences for the next year.

Instead of just repeating and repeating and repeating the same thing, the endless cycle, you can take what went well, you can take what went poorly, and you can learn from that so that you can actually improve the coming time. It's interesting to hear you say that it's made a difference in your life, because it's a theme I've noticed in many successful people from many disciplines.

It's kind of an intangible thing. It's hard to put a value on it. I wrote a post about my book of lessons, and at the end of the week, I might write a lesson in my book of lessons. That book is the most important book that I own, because it's the book I'm going to go back to to make sure I don't repeat mistakes.

Also, Friday is a day to sort of... I like to take a pause and start to get excited for the weekend, because I'm going to be getting out with my family, trying to do fun, creative things. It really stinks to work. You might have fun things to do on the weekend, but if you're working right up until 6 p.m.

on Friday, there isn't this nice transition. It's like work, work, work, and then bam, okay, better have fun now. I'd rather sort of ramp up into the fun, sort of get excited, talk to my wife about it, "Yeah, we're going to do this and this," and sort of get fired up.

So, yeah, it's another one of those things. I wholeheartedly appreciate being able to live this lifestyle. I do not take it for granted. I've worked very hard at certain times during my life, and to be able to shape my life and have a reflection day and be able to carve out this schedule that just sort of creates a good life flow, it's amazing.

And, yeah, I hope I never take it for granted. It sounds really amazing. And it sounds...you make a good point. I don't do that as far as getting excited about the weekend, but I think that's a good idea. I wrote that down as something I'm going to... I think I'm going to implement that a little bit, do a little bit more planning.

I always--Saturdays usually sneak up on me. I'm so busy during the week that they kind of sneak up on me, and I usually don't necessarily have something perfectly planned. But it's a good idea to have something planned and then get your family excited about it. Yeah, yeah. Actually, I want to write a post about something I would call the visionary slacker.

I consider myself a slacker in the sense that I leave a lot of time open in my schedule, and I do it on purpose, just big chunks of empty time. I really try to do that. And a lot of people call that slacking off, or you don't want to make commitments or whatever, but it's like there's just some value in that.

It's--I don't know. It's really--it's hard to describe. But like I said, one of the things is you can take the time to get excited about the weekend. You can take the time to reflect. You can capitalize on opportunities that pop up. It's not that I never want to commit to anything, but it's easy to get buried in commitments, even if you are financially independent and retired.

I mean, there's a million things to do, a million things to potentially sign up for, and I make a conscious effort not to. Book recommendation for you. Have you read Pat Schulte's book, "Live on the Margin"? No. Pat Schulte and his wife write a blog at bumfuzzle.com, B-U-M-F-U-Z-Z-L-E.com. He should be on the show sometime in the next few weeks.

He travels full time with his family, so it's hard to nail him down to a time when he's got Wi-Fi to do an interview because he's on the road. But he wrote a book called "Live on the Margin," and he wrote extensively--I've never heard anyone other than you and he use the term "the slacker lifestyle." But he wrote his whole book.

Half of it is all kind of about basically being a slacker, and he uses that as a metaphor for exactly the point that you're making. So check out his book. It's "Live on the Margin." I think it's a pretty cheap Kindle book that you can buy, and his blog is bumfuzzle.com.

You would enjoy reading it. It's quite good. The first half of it is about personal finance strategies, and then the second half of it is about trading strategies. He comes from the background of a commodities trader, and now he's kind of a semi-swing trader with stocks. If by going on what he wrote in the book, he's kind of a swing trader in some ways.

And that's how he earns his money to keep himself on the road. So check out his book. You would like it. Sure, sure. Yeah, another thing along those lines is--well, Richard Linklater's old movie "Slacker" is one that's really inspiring to me. I don't know if you've seen it. I've never heard of that.

No, Richard Linklater? Yeah, Linklater. He makes great movies, and "Slacker" takes place in Austin, Texas, and all it is is it's just people walking around Austin, and each character only stays in the movie for like five minutes, and you just get a little snapshot of their conversation, and then it drifts to another conversation.

And these are all just slackers. They're just walking and talking. And that's it. And at one point in the movie, this guy's like, "Well, you know, I got band practice in about five hours, so I better just mosey along." It's got this feel to it. But what Linklater says is he didn't intend it to be like "slacker" in terms of a derogatory term.

He wanted to present people who--he said these people choose to-- they're proud of being a slacker because they use their time as they wish. And some of the conversations that they're having in this movie are amazing. It's mind-blowing stuff, and it just arises organically out of walking, getting the blood flowing.

It does seem that--and I don't want to-- it certainly seems that we miss out on a lot just due to how scheduled our lives are, especially in the work world, where we have to be there for a certain amount of time. Our lives are just so scheduled. It is challenging to find the time and the space for-- I mean, when do we take the time to think?

When do we take the time to think about what we want? One of my big learnings from being a financial planner was I learned that most people don't know what they want. And the biggest challenge is try to help people to figure out what they want. And how do you figure out what you want if you don't spend time thinking, if you don't have that space that you can be in touch with yourself?

And what happens is we're always scared to go into the woo-woo world where we're getting in tune with yourself, but the reality is that even I felt like-- and I feel like I've done an okay job with it, and maybe you were good at it, but many people--we spend so much time living according to others' expectations that we don't have any idea what we want.

And we find out that, again, we're out of it, we're into it, we're a physician, and we spend all this time and all this money and a decade of our life becoming a doctor, and then now we've been in practice for four years, and then I come in as a financial planner, I sit down, and all of a sudden we discover that this person together, just through a series of questions, we discover that there's no--like the person doesn't want what they're doing, rather that what they actually want is something completely different.

Now, you can't go back and undo the past, but sometimes you can get to--if you know what you want, it's a lot easier to get there more quickly. Yeah, yeah, absolutely. And I've got to point out that my wife has been just invaluable in this whole process of leading a free life because it's so great to have someone around that you can-- that's on your wavelength and can give you smart feedback and just to have people around to surround yourself with people that think the way you do.

So you're able to not feel like a total freak or not feel like an outcast. So having her around has been super helpful, and I would advise anybody who's embarking on a weirder lifestyle, obviously you should find the other people who are into that and spend your time talking to them.

That's what we do online, right? Make communities of people. Daniel, your website is awesomesecrets.com. Anywhere else that you'd like people to find you? Any other way that you'd like people to connect with you? No, that's--yeah, I think that's good. Awesome Secrets is where I'm doing my thing right now.

Anything else you'd like to share before we go? Words of wisdom, any of your books from your book of secrets? Any of your lessons from your book of secrets? Yeah, don't lift anything really heavy. You're worried about, what, messing your back up? Is that the idea? Yeah. I had this experience recently, and I thought, "Man, I'm getting old and maybe mature." I had this experience of just--I've always been the person to go up on the roof and fix my roof and do that stuff because I don't like paying people to do stuff when it's easy for me to do.

But I had the experience the other day. I was looking at somebody trim a tree, and I was thinking, "I don't want to climb up ladders and trim trees anymore." Even though I've never fallen off a ladder, that just seems like one of those things that-- out of proportion risk.

It would really mess up my life to fall out of the tree or fall off the ladder and break my back versus just paying someone a couple hundred bucks to do it. And I recognized, "I'm getting old. Maybe I'm starting to recognize these trade-offs." Yeah, of course. Thank you for coming on the show, Daniel.

I really appreciate it. I'm glad that you reached out to me. I really feel--like I think I said in the introduction--I really feel that-- I don't want my show to be about just bringing the same old 80 podcast guests that are everywhere. If you want to go listen to them, go Google the other people.

And I don't want to just bring a bunch of financial people, but I want to bring interesting ideas. And one of the most interesting ways to do that is to hear from people who are in the community who are doing it. So I appreciate your reaching out to me.

I'd encourage other listeners, if you have a story that you think would be interesting or if you have anything that you want to talk about, I think it's valuable. And sometimes people are intimidated. They feel, "Well, I'm not--I don't have this resume of all these things that I'm going to tell people." But what happens is that when you start hearing people's stories, you can pick up on the themes.

And I learned that doing financial planning. As I learned more just listening to clients, even though many were just normal, everyday people, you start to pick up on the themes. So it's super valuable, and I appreciate your making the time to come on. Sure. Thanks for having me. Thanks so much, man.

And that's the interview. Told you it'd be fun. Told you you'd learn something. That's the show. I appreciate--Daniel, thank you so much for coming on the show. I appreciate it, and I really enjoyed and appreciated just learning from-- how many times can I say "appreciate"? I'm glad to be able to learn a little bit from your experience, and I wish you great success.

Keep up the great articles. Head over to Daniel's blog at AwesomeSecrets.com. Check out some of his articles. I like his book of lessons idea. What a fabulous idea to create a book of lessons of all of the things that you have learned over time. What an amazing thing to pass on to your progeny.

Wouldn't that be cool if all of us had a book of lessons and that we could write up and give to our kids, give to our grandkids, things like that? I think that's a good idea. I'm going to start implementing that. Note to self, establish a new category in my journal, "Book of Lessons." Have a great Monday, everybody.

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