JOSH: Hello, and welcome to Clearer Thinking with Spencer Greenberg, the podcast about ideas that matter. I'm Josh Castle, the producer of the podcast, and I'm so glad you joined us today. In this episode Spencer speaks with Will Eden about the use of history as a problem-solving toolbox, the impact of aging on institutions and biology, the benefits of variation and stressors on complex systems, and perspectives on value investing and market catalysts.

SPENCER: Will, it's great to have you on! Welcome.

WILL: Yes, absolutely. I'm happy to finally come on the show.

SPENCER: So the first topic I want to talk to you about is actually one that is important to me, which is the value of history. And the reason it's important to me is because I am kind of embarrassed to admit how little I've studied history, and I feel guilty about that. I feel like I should study it more. So basically, I want you to convince me to study more history.

WILL: Sure. Well, you probably feel about history the same way that I feel about really famous books and stuff. There's a lot of old literature that I confess that I haven't actually read, and I feel I maybe should, but yet I haven't gotten a lot out of doing it.

SPENCER: That's the problem as you're going to pick up a random history book, and maybe you won't learn that much. But how do you find the good stuff? And what is the good stuff?

WILL: I actually do think that that's a serious challenge, because I don't think all parts of history are equally interesting. And I don't think all takes on history are equally helpful. So I guess to think about what I get out of history and why I like to dive into it so much is I would say it depends on how unprecedented the world we're living in actually is or not. And I think that a lot of people today feel things are so different, that historical lessons don't really apply to the present. And I would argue that actually, the more unprecedented things are, the wider a range of reference classes you actually need to look at.

SPENCER: Is that because different bits and pieces will apply?

WILL: Yeah, exactly. It's not like history exactly repeats. But it does rhyme. And I think a lot of the trends that you see throughout history actually gets to something more fundamental about human nature. I don't think we're as divorced from the humans who lived a hundred years ago, or a thousand years ago, or even 10,000 years ago, that we maybe like to pretend. And so I feel looking at how civilizations have struggled and how they tried to meet those challenges or failed still feel to me timeless, important human lessons, I guess. And a lot of those people lived through things that were completely unprecedented to them, in much the same way that we're about to encounter some future history that is unprecedented to us. So, I guess, in short, I think history is more timeless and more relevant, and just helps open up my eyes to what features of our current world are more temporary and contingent. Maybe short term anomalies, and which things might be actually more persistent, and something that we're likely to see in the future, too.

SPENCER: Yeah, it's really interesting, because we're living in history, kind of, we're embedded in it. We think about all the things we see around us as permanent fixtures. It's like, "Oh, the United States, of course, the United States is so powerful," and it's always gonna be that way. But then when you take a step back, and you look at how many empires have risen and fallen? It's kind of a shock, right?

WILL: Yeah, totally. And I think you've hit the nail on the head. I think a lot of people realize that there's something sort of rusty and creaky and a little bit decayed about where we are as a global empire right now. And I think a lot of people can feel that. And I think that naturally leads to this question of "Okay, well, what brought about the downfall of these super powerful states? And is there something that we could do?" But I think properly diagnosing the problem is actually easier than solving it. Because there's a lot of factors at work here. I'm still on the fence about whether learning history can actually save us from it or not.

SPENCER: Yeah, well, there's always that perspective, that's like, "Well, you can read all the history you want. But until you live through it, you can't actually learn the lesson. [laughs] You have to go by the painful mistake." Do you have some thoughts on the decay we're seeing today in America? And what is the shape of that decay? And what do you think the causes are?

WILL: Oh, man, that could probably be its own whole podcast. I would say that I have lots of theories, and I think a lot of different historical empires do look broadly similar. I do think there probably are some broad lessons that we can draw, though, I think it's very clear that empires at a certain point get over extended, they always try to reach a little bit further than their actual capacity allows. And I think that the folks in charge are slow to update on the fact that maybe we're not as capable as we once were. Because I think the US really occupied this unique position after the Second World War. We were something like half of global GDP, because almost every other country in the old world was just absolutely wrecked. So we came from this weird position of basically controlling more than half of the entire output of the world. And that's just basically steadily shrunk. And we're reverting to the historical mean of living in a basically multipolar world. And that's a transition that most empires don't do very gracefully. So I think I would flag that as one concern.

SPENCER: But people say that if you look at historical examples, where there was a leading power, and then another power cut out that often that leads to conflict. I haven't looked into the data myself.

WILL: Yeah, I've seen some of those studies [laughs]

SPENCER: How concerned are you about that? Obviously that's a simple model. It's a model of these two powers and this tends to happen. It's a very outside perspective. And I'm curious, do you take that seriously?

WILL: Well, my whole point about trying to study history is to take the outside view more seriously. And I would say, history would suggest, outside view, yes, the US is going to come into conflict. And it seems fairly clear that China's the other leading contender on the world stage, but I don't think it necessarily has to be the only one. You certainly still have Russia which has more nukes than anyone other than us. And a more unified Europe, I don't think that's actually the road that that's going but an actually coherent EU would also be a player on the world stage too. And there's other potential factors which could come into play. But I do think we are moving from a world of one power center to two and a half or three or something.

SPENCER: Do you think the power of Russia comes anywhere close to that of China? I'm a little surprised to hear you say that.

WILL: Basically, only because of the nukes. If you look at the military spending, they're more comparable with a world power. If you look at the total size of the economy, absolutely not. And so it's basically a question of, are they going to maintain the disproportionate spending on the military? Or are they ultimately going to, themselves, revert to the mean of a mid-sized mid-tier power? It's a really hard question to answer because they do have a whole lot of nukes. And I feel like that could really just change the geopolitical game forever. I do think that is one way in which the world that we're living in is somewhat unprecedented. There has never really been a super weapon of that magnitude. So I do think that could meaningfully impact the geopolitical situation. But yeah, I do think the long-term outlook of Russia isn't very good, unless they can domestically improve their own economy, which is proven to be very challenging for them.

SPENCER: You mentioned a major problem that large civilizations have is they overextend themselves. In what ways do you see the US having overextended itself?

WILL: If you just look at the number of countries in which we have active military troops, it's a shockingly large fraction of every country in the world [laughs]. And we have fairly explicitly included in our security umbrella almost all of Europe, parts of Asia. We've obviously spent literally trillions of dollars on wars in Iraq, Afghanistan. I think the average person in the US would be hard-pressed to name, quite frankly, even a single benefit of that. And I don't even think that's a controversial thing to say now. I think that was probably a viewpoint that was controversial in 2002. But I feel like we've seen the outcome of this. And it's basically, we're trillions of dollars in debt. And it's very hard to see what benefit the people of the United States got for that spending.

SPENCER: It is really shocking and horrible to think about how many people in this country are struggling to make ends meet, and then we spent [laughs] a couple trillion dollars on wars, that in retrospect, were probably pretty dumb. So yeah, it's just something just really jarring about that. The priorities are really weird.

WILL: Yeah, and I would say that points to another one of these near universals. The thing that brings down empires is usually some crisis with their budget. It's usually fiscal. And when you get these massive countries that are also heavily in debt, one of the common patterns is that they then try to monetize the debt and the currency gets debased, which upends the entire economy, and then things go into a spiral fairly quickly. I know a lot of people are worried about that in the US, I'm actually not worried about hyperinflation now.

SPENCER: Why is that?

WILL: Basically, because a lot of the money being quote unquote printed isn't really entering the circulation, that can easily change. It could change quickly. But the current way that policy is being done isn't really trickling down into spending in the US economy. But if we started to increase our debt massively, and basically forced the Fed to purchase all of that extra debt, we certainly could see that happen. I'm not ruling it out. But I don't think we're getting hyperinflation in the next two years or something.

SPENCER: So I'm trying to understand that a bit more, because as I understand it, there was just this massive financial stimulus where the government took on tons of debt in order to pump money into the economy. Why is that not being spent?

WILL: We're probably getting into the macro stuff, which we maybe should cover later. But I would say the short answer is most of this money being quote unquote, printed is actually sitting at the Fed as excess reserves. That's money that is not being meaningfully injected into the US economy in the sense that we would think of it.

SPENCER: I see. So stepping back for a moment, again, to talk about the decay of American society. I think this is something that's on a lot of people's minds. Because we've just watched in real time as a lot of institutions did an awful job with COVID. So I'd love to hear more of your thoughts. I think it's really interesting. You said about a lot of problems that civilizations have actually ended up being monetary in nature. What are their thoughts you have about the decay we're seeing?

WILL: I think there are just so many different threads. It is a very complex system. And some theories about the nature of the problem is that complexity itself is necessary to try to adapt to current situations, but that complexity itself creates vulnerability. I do think that, just on a very broad level, if you look at civilizations, they tend to have this expansionary period, where they're on top of the world. And they're doing things somewhat ad hoc, but it's basically working and folks are fairly talented. And then institutional sclerosis sets in. And people then become bound by rules and procedures, and things just start to get bogged down they start to get stuck.

SPENCER: Is this just the increasing regulation or...?

WILL: Yeah, that's certainly one form of it but it takes lots of forms. For instance,we have a new problem in the economy so we create a new government organization to deal with it. Well, after the problem is dealt with in the short term, this entire new agency doesn't just go away, it sticks around, it persists, it takes on new missions. And you get this institutional creep, where it's very easy to add, and it's very hard to subtract, after you have a whole group of people whose job depends on their continued existence. And the continued existence of a problem for them to solve, all of a sudden, they're gonna start finding new problems to solve, because no one wants to lose their jobs.

SPENCER: Some people say, "Great, new problems to solve, okay, they're gonna solve more and more problems."

WILL: [laughs] Which is true if they're solving problems. And I think the concern is they can become overzealous and start to see problems where none exists or they start to impinge on someone else's turf. And then you get these interdepartmental turf wars. I do think these things do happen and just contribute to everything just becoming a little bit harder, and a little bit harder, and a little bit harder. And it's very slow. And it's hard to roll back, even though it feels obvious, and everyone can see it coming. I think usually the focus here is how there are these small, concentrated interest groups, and they can get very large benefits to themselves if they can nudge policy a bit. And that causes a little bit of pain for everyone, but there's no concentrated interest to stop them. That's a pretty standard story that I think is basically true.

SPENCER: So you have some special interest group that would really benefit from, I don't know some change, let's say a change in some tiny tax. But it really benefits them a great deal. And it's like, "It's only 1% extra tax." So nobody really cares that much or fights it that hard.

WILL: It's so small. No one will ever notice that we just took a couple dollars out of their pocket this year and every year forever. How many hundreds of times does that happen? It starts to add up to actual money.

SPENCER: I've heard this happens a lot in local elections a lot where most people just don't bother to vote. They don't really care that much. And then you have these special interest groups that will rally together. And they'll basically determine who wins the local elections. And that seems like a very weird and bad form of democracy.

WILL: There certainly is this whole question about whether democracy itself is fundamentally a stabilizing force or not. And I think that is a tricky question. I suppose to go back to looking at the broad swath of all cultures, all civilizations, it does seem like democracy is more the exception than the norm. It seems over all of human history, it seems like the norm is not to have a democratically elected government. And it's an interesting question to look at how those have fared over time. And you definitely got more democracy during the ancient world. And a lot of those cultures did very well for a while, but they collapsed just like everybody else did too. And I think a lot of the ancient writers are interesting to read, because they acknowledge a lot of the problems with that system. And it's interesting to read stuff from the early Roman Empire, because a lot of them are actually pretty vehement that they don't want a democracy. Because they felt it was fundamentally contributing to the problems of ancient Rome. They lived through basically a century of civil war before that was actually stamped down for a time. Obviously, the late Empire also had quite a lot of civil war as well. I think the broadest lesson is that no system is actually that stable. And it comes back to there being these somewhat universal tendencies towards the system not working. And I think almost every historian that has looked at this problem, does see that it's a problem for literally every society. And yet, no one has actually managed to fix it.

SPENCER: While it may be somewhat analogous to looking back at companies over the last 200 years, and noticing that there are almost no companies that are around from 100 years ago. And many companies that we would consider great companies, eventually they failed. And you could say, why? They were so big and powerful. Maybe it's just that the world is always changing. And maybe in order to not die, you have to actually keep reinventing yourself. And that's just an incredibly hard thing to do, to reinvent yourself from scratch. Just a nice little microcosm of this is Netflix versus blockbuster. Netflix basically reinvented itself, and survived and blockbuster didn't reinvent itself and died. What if every 10 to 20 years, you have to reinvent yourself again, how many things are gonna be able to do that?

WILL: I think that is a very good point. And it illustrates a nice difference between a company and a country. A company can basically go bankrupt. And those assets can be redistributed to other people and their companies, and the economy as a whole continues thriving. And yet, we don't see that same thing happen with countries. Do you think that there's something fundamentally different between a country and a company? Or do you think it's just one of these institutions is longer-lasting? Is it more sticky? It's harder to change, harder for folks to allow it to fail, I guess.

SPENCER: Maybe we do see countries reinvent themselves, but it's such a slow time horizon. And it's hard to notice. Maybe the ones that last for 150 years, maybe they really didn't reinvent themselves multiple times, you just have to look really closely to see that it happened. I'm not sure.

WILL: No, I think you raise a good point. And I think depending on how you'd look at it, I would say the United States has reinvented itself several times. First one was really early, we went from the Articles of Confederation, which is now this long-forgotten historical document that was basically the operating system for our country that was thrown out within basically a handful of years. So that was our first time. I would argue the Civil War was probably the second time in which it was very definitively established that, as a country, we're not a bundle of states. We are one state, and that, I would argue, is a pretty abrupt departure from the understanding before the Civil War. I would then argue that theFDR four-term semi-dictatorship where he added huge new swaths of social programs executive powers. That window, I think, was another not quite as fundamental of a rewrite, but pretty damn close and we are basically still living in the FDR era government. And when you think about the unique time in which that was born, it's not at all obvious to me that that form of government is necessarily the best government for 2021. And so I guess the question is, then what does it take to do an internal reboot of a country? I certainly think it's possible, because we've seen it happen before. We've seen it happen once from a leader who is fairly charismatic during a crisis, once with an all out civil war, and once where the original founders just decided to redo the whole thing. Those are three pretty different paths to getting a reboot. Certainly, I would like to avoid the civil war path for sure. I don't think that's where our country is headed. But a lot of people are certainly scared that it could.

SPENCER: It seems like we went from that being inconceivable to being, "Well, I'm pretty sure that's not gonna happen."

WILL: [laughs] Oh man, it's funny. I actually went back and I listened to a lot of finance podcasts from early 2008 where folks realized there was a problem, but it wasn't yet fall of 2008, when it was a serious problem. And it's interesting to hear folks say things like, "Yeah, I think the probability of a major financial crisis went from1% a year to 5% this year. Okay, that's a five-fold risk.That's absolutely massive." And I think we could be seeing something where the background risk of a civil war in the US is less than 1% per year, but maybe it's a few percent per year now which, at that rate, it's more likely than not we see one in our lifetime if we don't fix something.

SPENCER: So going back to the reinventing of America that you pointed out, I mean, there's also this drift term in the equation. These reboots occur. But then in between, it's not that things are static. It's actually that many, many things have changed a lot over the years. I mean, just an example I find really interesting is the Commerce Clause of the Constitution, and how it seemed to severely limit what the federal government could do. And now it's basically flipped it on its head. It had radically altered society. I don't think people realize just how different society would be if that hadn't happened.

WILL: Totally. I guess there's a question then, do you think the Supreme Court could or even would alter that again now? It seems like it is within the powers of the institutions that we still have to basically flip the entire system on its head. And yet, I don't see very much willingness to do that.

SPENCER: Do you want to step back and explain that pause and implications a little bit?

WILL: Basically, the Commerce Clause, as I understand it, was put in there, basically, so that the federal government can force the states to create a free trade zone. The fear was that Virginia would put tariffs on South Carolina, or something. And the hope was that we would actually have this large economic union of the states and the federal government was allowed to enforce that aspect of it. But this was basically then reinterpreted to mean that any commerce that happens across state lines — which in a highly interconnected economy is virtually all of it — is subject to regulation by the federal government. I mean, it's hard to even imagine a 180 turnaround more than that. [laughs]

SPENCER: Without that power, as I understand, the federal government would just not be able to regulate many things that they currently regulate.

WILL: There was a law passed. I don't know how long ago this was. But it basically requires every act of Congress to have a constitutional justification. And if you actually just go and look, almost every bill, if you check this section, that justification is like "Yeah, it's covered by the Commerce Clause." [laughs] And so if you just go back, and look through each bill, and just take out every bill that uses that as its justification, you could start to see how profoundly this would affect the overall economy. I mean we didn't have an income tax in the US. Just think about that. Think about what a large percentage of our total spending that is. And yet, we had a country that didn't even run on that. We lived in a profoundly different world a hundred years ago. Profoundly different.

SPENCER: I was reading about World War One and it was just fascinating to me to hear about the attitudes of Americans and feeling that I don't really identify with those people. They seem very, very different from Americans today.

WILL: Oh, totally. Which again, is another reason you should learn some history. Even folks in our own country, even folks who nominally are our forefathers,just a few generations back, we think of these people as inconceivable. And I feel we really do have to try to wrap our heads around what it used to be like to be someone else. Since guess what, in 50 years, that could be us. In 50 years, we could look back and just be like, "God, we were so wrong, we were so off." We had no idea what was going on, and why. And I basically think that, as good thinkers, we actually do have to take this view that the world could be profoundly different within our lifetimes, and try to some degree, anticipate that and be ready for it. And to keep our minds open to those solutions. How else can we find our way out of this mess? Everything that's been tried within the current structure isn't working. So at some point, we need something outside the box if we're going to fix the problem. One place we can look to that is history.

SPENCER: That's interesting. We've talked about two benefits of history. One is looking at historical cases that might have some analogue to what's happening today, some piece of it pattern matches. And this seems like another use of history. It's a toolbox. And you can look back to history and say, what were the tools they used to solve different problems and are any of them applicable today? But I think that's really cool. Are there any other benefits of studying history you want to point to?

WILL: I mean, for me, that feels like the most consequential one because I am fairly motivated by intrinsic curiosity. But at the end of the day, I do want my thoughts to be directed towards actual action items. I guess my point is that to study history, it's more actionable than you think. It's not just this purely academic thing. It's actionable in that we live in a society that needs some help, and both diagnosing and fixing it. There's something to learn there, it feels relevant today. But yeah, I guess if I had to point to anything else, that's less instrumental. In some ways, I guess it's just that I am really interested in the human experience. I feel like a lot of us take for granted that we are the way that we are. And yet, if you look at other cultures, or even our own culture a couple 100 years ago, they thought so differently. Their thoughts, their beliefs, their experience of the world, all of that was so profoundly different that on a personal level, I'm just extremely interested in trying to get inside their head. I really want to understand what it was like to be someone. And they really are these foreign, almost alien species at some point. They were so different. And I just find it really fun and interesting and enlightening to just see different ways that my own mind would have been shaped if I lived there.

SPENCER: So that'd be a great third use case of history, just trying to understand the human nature, human condition, and the variability of humans. And I just thought of a fourth potential one related to that which is breaking us outside of our bubble or the things that we take as fundamental, like "This is the way things always have been this is the way things always will be." It steps you outside of that, and you can see the way a fish never knows the water, you're like, "Oh, wow, wait, a lot of the stuff we take for granted, it really shouldn't be taken for granted." One example that really struck me that made me feel like people a long time ago were so different than anyone I know, is the way they valorize war. I just thought that was so shocking. People would be like, "Oh, I can't wait to go to war. This is gonna be the time of my life." And it's like, what?

WILL: I will note that you see more of those accounts from the people who haven't yet gone to war.

SPENCER: Fair enough. [laughs]

WILL: For me, when I read the accounts of the First World War, it's virtually impossible for me to put myself in the shoes of someone sitting in a trench who's just been ordered to be the first man out. That is almost certain death, and a horrible, gruesome death. And yet, on some level, they did. And they kept doing it over and over and over. It's really hard for me to even conceive of that. And if you look at France in particular (but not just there) there were soldiers that were literally on the edge of just revolting and just leaving the battlefield. There were quite a few people that were shot because they tried this. So it's clear there was both a carrot of valor, but also a stick of like "If you mutiny, we're gonna kill you." And there's a shockingly large amount of that in pretty much every army throughout history. A large number of folks don't want to be there. [laughs]

SPENCER: One of the most insane recruitment tactics I heard about was they would have young women go around on the streets and if they saw a young man of fighting age they would basically humiliate the man for not being at war. I actually can't remember if that was World War One or World War Two, but I thought that was just so, so insane.

WILL: [laughs] Yeah, it's hard to imagine that in the modern world today. But we do live in this world of a very highly trained, very specialized fighting force, that's all volunteers. And as early as Vietnam, which wasn't that long ago. It wasn't voluntary. And it caused massive societal upheaval. And so I think we now live in this world that is, by historical norms, really disconnected from war. There's this one small section of our total population, which does go to war, and their families know that and experience that, and the vast majority of all of us are just blissfully unaware of what that is like. And I do hate to say it, but this does parallel the fall of the Roman Empire as well. [laughs] It does seem like on some level, when the upper crust of society becomes divorced from underlying reality, whether that's war, whether that's owning a business, anything like that, that certainly seems to be one of the warning signs, I guess.

SPENCER: It's like if they're working on their abstract models of how the world works, rather than interacting with the way that world actually works, that goes off the rails.

WILL: Right, you need a tight feedback loop. War is a horrible way to provide a tight feedback loop. But it does, I certainly hope that we can have a functional society with no wars, because I think that would be a much better society. But I do think that it has to be at least one of the hypotheses under consideration. There are these almost human universals that we just don't have to deal with anymore, and have that in some way taken away one of the necessary stimuli for reinvigorating political institutions.

SPENCER: I have this theory that humans are incredibly good at solving concrete problems where you can poke it and be like, "Oh, yeah, that's solved." We could physically touch it or see it. And very, very bad at solving abstract problems, where you can't really tell if you solved it. It's not like we can all get together and look at and be like, "Yep, that's all." And just as an example of this, we're really good at building bridges. It's Amazing how good we are at building bridges. And we're really bad at building educational institutions. It's hard to say what a good educational institution looks like, "Well, the campus looks nice. The students are wearing uniforms , are they well educated?" [laughs] We can't really agree on what that means to be well-educated or what we should teach. And I just wonder if that applies at the civilizational level. If your country is solving really concrete problems like, "Oh, people don't have enough to eat, okay, now they have enough to eat. Cool." Everyone can see that these things are getting better. And it's like at some point, you're solving really abstract problems as a civilization, you can't even agree how to measure those things, or how to define them.

WILL: And what the problem is.

SPENCER: Exactly. You just can endlessly argue about why education sucks. And it just doesn't get better.

WILL: And I do think it's funny that you raise that as a particular example, because the modern thing that we call the school system is only a couple hundred years old. And what we would call broadly as education or learning is far older and didn't look anything like that model. And I will just keep coming back to if you read history, you understand how historically contingent the way we do things now actually is. And you just realize that we live in these very temporary short-term solutions that we've made up. If you look at the swath of human history, our ancestors would find this crazy. I do think this is a nice segue, though, because you mentioned how you see something similar with a company and a country. And I think this is also true of any complex system, including the human body, which does lead to the interesting question of why we age. What is aging? I'm going to throw out there that I actually think you're seeing similar problems in all three systems here. Ultimately, there is this expected functionality and things go through the motions, but when unexpected insults crop up, those have some adaptive response, but the system never quite gets back fully. And I do think it's a somewhat controversial viewpoint, but I would actually argue that all complex systems exhibit very similar features and the reason that we don't have a society last forever, does have a lot of similar underlying problems to why you don't have your physical body last forever, either. Or, for that matter, your mind.

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SPENCER: So can you unpack that a bit? What are these aspects of aging that you see as analogous?

WILL: So our body is incredibly complex, in that there's basically tens of thousands of genes coding for even more proteins. And then if you look at how many of those proteins interact, you very quickly end up with this explosion of interacting systems in the body. And if you think that this thing could somehow operate at full efficiency, and it had a good way to dump entropy into the environment, in theory, there's no reason that this thing couldn't run in perpetuity. There's no law of physics that suggests we couldn't continue to survive forever.

SPENCER: Are there examples of animals that seem to repair themselves and don't naturally die?

WILL: They do actually. There are a very small number of them, but they do exist. And it's interesting to think about what's going on there. In very few of those examples, do they actually have anything like what we would call a brain. The truly immortal organisms have a very simple nervous system. They really are very simple stimulus and response creatures. And those nerves that they grow aren't really important. But for you and I, we have a memory, we have a brain that can last 80, 90, 100 plus years, and you don't want that thing arbitrarily regrowing.

SPENCER: Interesting, because it would wipe out existing memories or skills or something like that.

WILL: Exactly. the person that we are today, would be gone if we could regrow that whole thing from scratch.

SPENCER: You mean they get into philosophy of mind problems about continuity?

WILL: Totally. There is this fairly fascinating question which is: What if our neurons could regrow 1% per year? Could we have an immortal brain? And in theory, I think if you could perfectly rewire those neurons? If they could exactly replace one of the old neurons, I'd probably say, yeah, maybe that's doable. But that turns out to be a surprisingly difficult engineering problem, because when we're first forming in the womb, it's all in this very tight, very compact space, it literally starts from a single cell, and you actually develop most neurons throughout your life, not all of them, but most of them when you're this tiny embryo, and they all wire up. And what's interesting is, as the brain grows, those synapses actually lengthen. And so you have neurons that run the entire length of your actual head.You have neurons with several inch long nerves on them. And it actually turns out that to rewire that is just not really something that the brain can easily do. It can increase the strength of existing connections, but you don't really see the case where arbitrary neurons in the brain can just extend out to other arbitrary areas. That turns out to be a very difficult problem.

SPENCER: Are there new connections created from scratch?

WILL: There are in the hippocampus, the olfactory bulb, these very, very narrow situations. And you can certainly get local rewiring. But the phenomenon of growing arbitrary neurons in any area of the brain crossing large physical distances in the brain is just not something that we observe. So there's no biological mechanism.

SPENCER: If you had to replace these long ranging connections that can be really difficult just physiologically.

WILL: Yeah. As far as we can tell, maybe it's impossible to do with the current instruction set in the body, which again, as an engineering problem, shouldn't strictly be true. There should be some way to solve it. And I think this gets at the foundation here, which is that keeping a body alive is ultimately an engineering problem. And I think that could also probably be true of societies and a company as well. But it's a very difficult one. And it's helpful to look at the range of lifespans of things on our planet, and what they've done. And when you do look at super long-lived mammals, like whales and so on, or other super long-lived animals, like certain parrots, and so on, they can live much longer than an average human lifespan. And if you look at what genes are actually involved in that, it's often things like increasing the efficiency of the protein folding. It seems a lot of the marginal lifespan improvements that we see in mammals is actually just trying to tighten the control system on these mostly efficient processes to make them slightly more efficient.

SPENCER: Why would efficiency increase lifespan?

WILL: If you think of aging as being this error, and damage accumulation, if you go from five nines to six nines, in terms of how reliable that is as a system, you can build up those manufacturing defects much more slowly.

SPENCER: Oh, I see. So you're saying if you make an error one out of a million times versus one out of a billion times, you're just accumulating. And then your cleanup processes don't have to be that gray in order to still not eventually die.

WILL: Yeah, that's right. And there's still a ton of debate in the field about what causes aging. But I would say both there's errors within the broadly physiological process. We have some way of dealing with them internally, but it's not perfect. And then there's probably an external insult, which is harder to deal with. We create a new chemical that's never been seen before in nature, or some incredibly weird thing formed as a combustion byproduct. Just some really unwieldy molecule that our body has just never seen before. There are a couple of general purpose solutions in the body for trying to deal with this stuff. But it's entirely possible to create a molecule that is in a conformation that we have no existing way to fix. And this stuff can just build up over time.

SPENCER: This would be like mercury poisoning and things like that, or lead poisoning.

WILL: Yeah, it seems like our body has some ability to deal with heavy metals, but it's pretty inefficient at it.

SPENCER: So it could be it could be even worse for totally novel compounds that our bodies never would have encountered in nature.

WILL: Yes, absolutely. And I think it's important to remember how complex the physical world is on that level. If you cook some food, and you char the outside of that food, probably somewhere in there, you've made a molecule that's never been seen before [laughs].

SPENCER: Seriously? Really?

WILL: It's really crazy to think about, but the sheer number of ways that atoms, it just explodes so fast. There are so many more possible ways you can configure atoms than there are atoms in the universe for all time. When you think of it on that level, you can even get this happening inside of a body. And ultimately, we are designed by this evolutionary process. And we've developed in the most efficient way possible to meet our goal, which is to survive and then have kids. And it's very clear that this buildup of aging is environmental chance. There is always some just sheerly exogenous chance you die by accident, or you get an infection or something like that. Our body is only going to evolve to be as efficient as it needs to be to carry on one more step. And so we end up with a situation where if there's a large enough external pressure, there's very little internal incentive to fix things that are problems that emerge much later.

SPENCER: You're saying if you have a 1% chance of being killed by an animal every month, then there's not that much evolutionary pressure to make sure the system never dies from, let's say, slow accumulation of poison or something like that.

WILL: Bingo. You can be almost certain that no human would naturally live to age 200. And so basically, any metabolic byproduct that builds up over the course of 200 years is ignored by the body. There's absolutely zero reason to deal with that particular problem, which does create an interesting hypothesis, which is if we do extend our lifespans beyond what's been observed so far (120-ish years) then will actually start to see these second-order problems start to emerge where weird metabolic byproducts that we never identified ever before suddenly become a problem when you're 300.

SPENCER: New diseases, essentially, that you couldn't get as a younger person. So we talked about a few different reasons that people die. The simplest is just external threats, like you can get hit by a bus or killed by a bear or whatever. A second one is this damage model where there's always these little mutations and a little bit of damage occurring. And if you don't clean it up fast enough, you don't repair it, then you die. And then a third one is an accumulation of compounds that the body doesn't know how to deal with. And whether it's lead accumulating or some weird new molecule. What are other reasons that humans age and eventually die?

WILL: I mean, that might be pretty comprehensive.

SPENCER: Well, there are some things that just wear out. I mean, would you say that 's covered? Or would you put that in a different category, like the heart wearing out or something like that?

WILL: I guess there's a question of: Why does it wear out? Because it seems like things don't wear out for a very long time. And then suddenly, they do start to. Yeah, you can gradually see that there's problems of aging between the ages of 20 and 30. But it's not super severe, it gets much worse later.

SPENCER: Why does it go up quickly like that, as you get older and older? Why is it nonlinear?

WILL: Yeah, I mean, if you basically believe the accumulation of errors model, each successive step is then less efficient than the last step. So something that made an error once in a million times, as you get older, a lot of those proteins are glycated or they're malformed or something like that. And so you do have this set of damaged proteins trying to carry out the same process. Similarly, you can just get hit with sun rays. Stray cosmic rays break a strand of your DNA. And all of a sudden, you make a slightly mutated version of some protein. And it's just not as good as the old version was, you build up errors in the self-perpetuating machinery?

SPENCER: I see. So imagine you have a computer and training software. And then every once awhile a bit flips, that messes up the software slightly. And then you're trying to build new software using this now slightly broken software, and then that ends up broken, it's just more and more breakage occurs on top of other breakage until the whole thing falls apart. Is that right?

WILL: Yeah.

SPENCER: And is this an exponential accumulation of damage? Or what curve does it follow?

WILL: Hyperexponential. If you look it up, it's called the Gompertz law, I believe. Or it's possible it's something hyphenated. Yeah, it is an exponential inside of an exponential.

SPENCER: Alright, that's a little disturbing. I know you've been very involved in investments related to aging. So I'm curious to hear some of your experiences there. And in particular, what you see as most promising and where you don't see as much promising stuff.

WILL: Yeah, I suppose I would say that a lot of the field is really devoted to just slowing down what it considers this fundamentally inevitable process. And I'm really interested in the approaches that tried to get at the root of the problem. SENS and Aubrey are often considered to be radical or out there. But the focus on solving aging as a pure engineering problem of dealing with all of these byproducts in the body that build up slowly over time. I think that's actually a pretty promising route. And I definitely think in terms of fundamental research, I'd say way too little is going into fundamental causes of aging and trying to fix those. I think because folks rightly believe that's a very hard problem. But I do think taking that engineering mentality is probably more fruitful.

SPENCER: Is that what SENS does?

WILL: Yeah, so if you look at the SENS pillars, they're all focused on identifying these long-lived molecules that build up in the body and make things work less well. Stuff to beat cancer is maybe a little bit more out there, which is about trying to remove the ability of stem cells to grow in your body and then relying on resupplying those with exogenous stem cells. But if we set that part to the side, almost the rest of the platform is basically what are these molecules that our body can't deal with? It fundamentally assumes that the body is actually pretty capable as a self-repairing machine. And I think the fact that we can live to 60, 70 without serious illness if you take good care of yourself, in most cases, that's a pretty incredible feat, actually. And it's more about trying to get the body out of its own way. It's to allow those sorts of natural healing processes to resume. And to do that you need to get rid of that built-up error.

SPENCER: So I guess you could either improve the repair processes somehow or you could reduce the error rate. Are both of those being tried?

WILL: Yeah, the SENS platform fundamentally assumes that the body does a good enough job except for these few classes of things in which it hasn't really evolved to handle well, because it hasn't had to. And I don't think that that's a crazy response. If you look at us as a machine, the reliability is already shockingly high, maybe not as high as a whale or a parrot or something, but very, very high. So I certainly don't think that that's a crazy approach.

SPENCER: I've heard that trying to, let's say, make better treatments for, let's say, heart disease or things like that, where obviously, everyone wants those treatments, and they would be great. But they don't extend life as much as people think that they would, because a lot of people whose life they extend, they're going to end up dying relatively soon after that.

WILL: Yeah. Which is a point that SENS has made. I think, from their calculations, if you want 100% cured all cancer, you would increase expected lifespan by a few years, because there's other things that will very likely kill you.

SPENCER: That's shocking. Although at least, that would seem to be really good in addition to that, because cancer does seem to be particularly bad. I'd much rather have a stroke and suddenly die.

WILL: Yeah, no, I would snap my fingers in a heartbeat. And I would gladly choose that world. But their point is that the body is in this hyperexponential decline, you have to solve everything simultaneously, or you don't get radical lifespan.

SPENCER: So there are all these different claims of different treatments that, maybe, maybe, maybe, help lifespan. Metformin is a famous one. There's (what is that called) Elysium? There's a bunch of these things floating around. And I'm curious, do you take any of these things? Are you comfortable talking about that?

WILL: Sure. The short answer is mostly no.

SPENCER: That doesn't bode well for the state that you're in [inaudible] [laughs].

WILL: I know. I know. Yeah. Look, I think for some of them, there's more of a case than others. And I think with most of these things, insofar as you have a working functional body, a lot of these things are compensating for when things aren't working as well. And insofar as, you do age, you do get old, a lot of these things can be helpful in old age, but they're not necessarily going to improve performance when you're young. I don't think that's true of all of these compounds. But I do think that there's a stronger and stronger case, to be doing more to lean against the natural effects as you age.

SPENCER: I see. So you could see yourself taking some of them as you get older.

WILL: Yes, yes, I definitely think there is a good case for some of them. The other thing I would say, though, is a lot of the most reliable ways to extend lifespan are basically trying to mimic the effects of just lowering your total calories. And what's tricky about that is if you look at these calorie restriction emetics, a lot of them have really bad side effects. It seems basically slowing the rate of aging is slowing the rate of living. That's not what most people want. Now, I do think some of these things do get you off of that curve, but a lot of them are just shifting you on that curve.

SPENCER: So you just have a shittier life while you're alive, but you live longer, basically.

WILL: That's right. And unfortunately, that's what a lot of people think hyperextension means. It's like, "Oh, you mean I'll live longer when I'm old and falling apart." And that just sucks. And so I do think people have an unfairly negative impression of what it would be like, whereas if you ask people would you like to live to be 100 but in the body of a 20 year old, it will almost always be like, "Hell, yes." So it's clear that what people care about isn't lifespan, but health. They want to be healthy. And I think that the field just hasn't demonstrated yet that we're capable of making someone who's 100 feel like they're 20. And I do think that is a very hard problem. But I think that we haven't yet convinced people that it's worth it. There has not been that just ultimate convincer everyone in the world is like, "Yes, this just unambiguously works." We don't have that yet.

SPENCER: So keeping in mind that obviously, this is not medical advice. I'm just wondering, what are the most promising compounds if you had to make a bet on the ones that would be worth taking when you're 50 or 60, or something like that?

WILL: Yeah. I mean, Metformin is putting up a fairly good show.

SPENCER: And that regulates blood sugars, is that right?

WILL: Yeah, that's right. There's some debate about whether it's doing some other things as well. But even if it's just the blood sugar thing, I would say, if you're already not not eating a great diet, and your blood sugars are starting to slip. If you're fasting blood sugars in the 90s, rather than in the 70s, or even 80s, yeah, maybe you should start thinking about using it. And I generally don't think it's optimal to take a drug to replace something that should be fixed with a lifestyle factor. But the simple fact of the matter is, on a population level, folk's behavior is pretty resistant to major lifestyle changes. Most folks don't mind using some drugs to fix a problem, though even then — like compliance — even just swallowing pills is shockingly well, but so much higher than, "Hey, you need to exercise and eat fewer carbs. Just on a population-wide level that is almost doomed [laughs]. It's so grim.

SPENCER: You could say, "Well, people can just make that choice themselves. But empirically, it seems like people have a really hard time making the choice.There's a huge number of people that want to be healthier, that want to exercise more, and that want to be slimmer, and they struggle.

WILL: I mean, as an economist, I feel like I have to point to people's revealed preferences. They might actually be doing the thing that maximizes their happiness. I think that's one of the things that people don't want to acknowledge, but I think, frankly, is true. And a major factor here is people eat food for enjoyment. And quite a few people are just really chronically super unhappy. And if you have something that you can do multiple times per day to feel happy for even a short window, I think people are just going to do it. And it's not necessarily clear to me that they're wrong. It is clear to me that there's a society-wide dysfunction that so many people are unhappy. On the margin, eating worse food and being happier right now versus the theoretical effect that food will have on your body when you're 70, I can basically understand why people choose that.

SPENCER: Spoken like a true economist. [laughs] I think that's a very interesting perspective. And I'm sure, there's some truth to that. But I guess I would also just point to a lot of other complicating factors. It seems like a lot of people will diet, lose weight, then not be able to maintain the diet, and gain it back. And they just flip-flop endlessly in between, which suggests that they really care about losing weight, but they don't know how to maintain it longer term.

WILL: That's true. I do think there's some of that. Certainly folks can feel two ways at once. They can both want to eat food that they know isn't super healthy for them because they like it and want to lose weight. And they can split in between those two views.

SPENCER: And simultaneously, they can have both of them and they can feel like this food is delicious and I wish I wasn't eating it. And that's the human condition.

WILL: I've felt that many times [laughs]

SPENCER: I also just have this intense feeling about certain foods, that they're addictive. There are certain foods that basically we just don't ever buy, because we know we will literally binge eat the entire thing. If it's in our gut, it's crazy. It's just like, "No, I can't buy that food. I can't trust my future self."

WILL: Yeah, totally. Yeah, totally, totally [laughs].

SPENCER: I would love to ask more about different compounds and your view on them. What are the other promising ones?

WILL: You mentioned Elysium, which is basically an energy product in the body. I do think there are ways in which our mitochondria start to function less well, over time, as just part of this whole phenotype of aging. And so the set of compounds that are compensating for dysfunction in the mitochondria and improving that are actually plausible ways to get off that curve, where you're both more functional and aging less quickly or less severely. So I do think compounds like that are promising. And again, you probably noticed the most benefit from doing it when you already have that dysfunction. Because with almost all of these compounds, almost everything has some trade-off or there's a reason that your body would have done it already. So I always take an evolutionary heuristic when I'm looking at this stuff. What I've heard about middle-aged people that have taken Metformin is if they're really high-performing athletically already, they tend to just not quite feel as good on it, they tend to just not quite perform as well on it. And so I do think if you're really running your body optimally, there's very little you can do to make it better. I'm not gonna say that there's nothing to do, but there's very little to do.

SPENCER: It's like the efficient market hypothesis of evolution.

WILL: Well, yeah. You really need some plausible reason to think that you're beating what evolution could have done naturally.

SPENCER: Why couldn't it be due to availability?

WILL: Yep. So that is one of the ways. So suppose there's some compound that is actually really good for your body, but it's super rare in nature. But I guess the question then is: If that's true, why doesn't your body evolve to become more sensitive to it? If you look at, let's say, thyroid hormone, you need an incredibly small amount of the hormone in absolute terms, like micrograms, absolutely, just phenomenally tiny. And yeah, you need iodine to make thyroid hormone, and you can get very sick if you don't get iodine, but our body has clearly evolved to need extremely small amounts of it.

SPENCER: I suppose if iodine wasn't available at all, you could imagine compounds that just can't get it at all, and then your body never even learned to manufacture it. Because it's maybe too complicated.

WILL: Indeed. So there are vitamins and things like that which our body doesn't need that we don't make. But what's interesting there is how much that is influenced by the evolutionary history of those compounds. Almost every animal can make vitamin C, humans can't. We lost the ability to manufacture our own vitamin C. It's a simple molecule. It's very easy to make. Almost every animal on earth does it but we don't.

SPENCER: And then we learned that we needed it. And then we forgot that we learned that we needed it. Is that

WILL: Many, many times over. Yeah.

SPENCER: Like scurvy, it was a mystery. I think for some time we didn't get it. And then eventually, we figured out, "Oh, wait, maybe you can suck on some lemons or something."

WILL: It's so weird, though, because it was solved multiple times. And then the solution was forgotten multiple times. [laughs] I wonder man, sometimes.

SPENCER: On the history topic, just going back to that for a second, we have this sense that living in history that knowledge just increases over time. And then you look at these historical examples where knowledge is actually forgotten. And you're like, "Wow, could that ever happen with technology?" Are we just past that point where we can forget stuff? It's an interesting question.

WILL: I've talked to different people about this question. When I talk to engineers, they're basically like, "If you give me the blueprint, I can probably make it." And if you talk to social scientists, historians, folks that are interested in the collapse of society, those people tend to be a lot more skeptical. There's a lot of fiddly little know-how type things that you need to get the processes working. And you see this throughout history a lot that they lose these social technologies.

SPENCER: There are bio labs. You can't replicate each other's experiments today reading each other's papers. And obviously, there are false positives, but I'm not talking about that. I'm talking about how it's a real result. And they literally can't replicate the work, because there's weird, subtle details about things like how many minutes to spin the compound, or what's the temperature of the lab, or all kinds of crazy stuff.

WILL: Absolutely true. I do think that is somewhat of a problem dealing with a sufficiently complex system. Most classrooms have you learn some chemistry, and do some pretty simple chemistry experiments. It turns out to, within rough tolerances, exactly the same every single time. So, clearly, there are domains in which you can do that.

SPENCER: That makes sense. So going back to the longevity question for a moment. So we talked about things like Metformin. What about things like supplementing with younger cells. A really extreme example is using children's blood and injecting it into old people. They get really dramatic. But stuff like that. I've heard that in mice, it actually seems to make them live longer.

WILL: Yeah, it does seem surprisingly good. There's a lot of debate about what is actually going on with the blood exchange thing. The really good results that you see in mice are actually connecting the old and the young circulatory systems together into one system.

SPENCER: So it's not just an injection of blood.

WILL: Yeah, you don't see as good results with just injections. You can get some results but it's not quite the same, which suggests that a lot of it is having young organs and an old body makes things work better, because guess what? Everything is starting to break down. If everything is breaking down, if you swap something old for something new, it starts to work better. Your kidneys just filtered less well,every single thing works slightly less well. So if you take that aspect away, and you're just looking at swapping blood or plasma or something like that, the rough consensus seems to be that most of the effect you're getting is actually diluting and replacing the old blood, rather than the new blood itself being a positive factor. There is a company that is basically working on this with Alzheimer's patients, it really does seem like what you actually want to do is remove old plasma from old people, and just filter that and put that back into them. That actually does seem to produce an anti-aging type.

SPENCER: I see. So rather than the young plasma, young blood actually being particularly relevant, there's also this idea I've heard about how some of your telomeres will run out or something like that. And then when that happens, you'd actually be better to get them out of your body rather than have them hanging around.

WILL: Yeah, the telomeres question is interesting. That has gotten a lot of focus in this aging community. I do think that those are more popular focuses, 10, 20 years ago. I feel like it's starting to take a little bit of a backseat. My totally heterodox unproven hypothesis on telomeres is actually probably more cells can lengthen telomeres than we think. But the reason that they're there, and the reason they don't lengthen them is basically just because they actually realize that the cells are falling apart and should die. You do have cells in your body, namely, your stem cells, which can increase the length of their telomeres. So there is certainly a subset of cells in the body, which can do it and they produce all of the other cells in the body. So it's not clear this is actually a binding constraint. On the body, it seems more a backup failsafe thing, which makes me think that that's actually not a really good target to go after to try to fix this. So, personally, if someone is suggesting a telomere lengthening supplement, or something like that, I would probably try to just stay clear of that.

SPENCER: And my understanding is there can be some trade-off between cells dying and then getting cancer as well. You want to comment on that?

WILL: Yeah, that's right. If you think of multicellular life as being a broad cooperation between genetically similar cells, you should think of cancer as being the cell that decides that it's going to defect. And it very much looks like that physiologically in the body, because your other cells feed the cancerous cells. It's actually stunning how much your body supports the growth of a cancer cell because your body basically trusts that that thing that is sending out those signals is healthy. From that perspective, you would expect a lot of the developments around becoming multicellular to be finding ways to avoid, slow, or stop cells becoming a tumor. And so, pretty clearly, the telomeres are one aspect of that. And you basically don't get cancer unless the cancer finds a way to avoid that problem. So either it starts in non-replicating cells, and it redevelops the capacity to do so. Or the cancer actually starts in a stem cell. And it is increasingly widely believed that the cancer stem cells actually are the fundamental root cause. And there are companies going after that hypothesis in particular. So we'll see how that pans out.

SPENCER: Because you're saying, otherwise, the body would just take care of it basically, or die eventually, automatically.

WILL: You're constantly getting cancers throughout your body all the time. But there's multiple failsafes involved, some of them involve stopping the cancer from expanding past a certain point. Some of them involve the cell trying to kill itself. Some of them involve the cell trying to send a signal to other cells in the body like, "Hey, there's something wrong, you have to kill me." And so for cancer to emerge, you need to have multiple problems happening simultaneously. You don't get cancer from one problem. It is this very multifactorial process, because it has to evade every evolved process to stop.

SPENCER: Got it. But what's the growth hormone linked to aging? I've heard that if you knock out the thing that makes growth hormone, like in mice, they'll live a really long time.

WILL: Sorry, I thought you meant people that are injecting it.

SPENCER: You're saying it's pointless to inject?

WILL: You have two camps on that. So it's very different if you're using growth hormone during the developmental process (which I suppose actually is worth going into here briefly). If you're doing things to young animals (not adult animals), you can basically prevent them from growing to their natural, full extent. And these artificially smaller animals do tend to live longer forever, but they also tend to be much more fragile. They tend to be super cold all the time. There's a lot of trade-offs there that you don't want. But basically, if you're willing to stunt animals when they're growing, they do tend to live longer.

SPENCER: And I'm imagining the future human race would be just really, really tiny people wearing really big coats all the time.

WILL: So it is funny you say that. There is a tribe in South America that actually, genetically, is growth hormone deficient, and they're all small. And basically, they have zero rates of heart disease, as far as anyone can tell.

SPENCER: Oh, wow. Do they tend to live a long time?

WILL: Well, see, that's tricky. Because they haven't really been in a fully modern system. So it's hard.

SPENCER: So they're still dealing with the stuff that you have to deal with to survive?

WILL: Yes. You can still die from accidents. So, yeah, my guess is if we could get them into a modern system that is safe and they have tons of healthcare and stuff, they would live longer than a normal human to some degree. How much are we talking here? 10%, 15%, something like that maybe. I think if you're talking about that marginal gain, most people aren't willing to be super short.

SPENCER: Probably a collective action problem, we all gotta go into it together. It's the new generation, everyone being really short.

JOSH: Hey, everyone, sorry for the interruption. I just wanted to let you know that after the recording, Will contacted us with the following correction: There's a family lineage with a congenital growth hormone deficiency called Laron syndrome that lives in villages in Ecuador. But he had incorrectly identified them as indigenous people. They actually migrated there from Spain, where other members of the family still live with the same genetic mutation. They suffer from fewer diseases of aging, cancer, and diabetes. But their lifespan is indeed no longer than average due to vulnerability to accidents and injuries. This serves to demonstrate the trade-off between longevity and robustness under free-living conditions for these types of anti-aging interventions. Thanks. And now back to the conversation.

SPENCER: What about intermittent fasting?

WILL: Yeah, so that's one that I think isn't necessarily going to increase your lifespan by a huge amount, but probably a little bit, but could increase your health span by a lot. I basically think that IF is probably one of those few things that gets you off the curve in terms of performance and health. I don't think you're actually sacrificing much performance for much health gain there.

SPENCER: And so what's the way you recommend people do that? What's the schedule you think is best?

WILL: I wrote a very unhelpful FAQ in a blog post, which basically says the best fasting is the fasting that you do, rather than the fasting that you don't do. So to some degree, I advocate that folks do what actually feels possible. But I'd say that you can largely think about it as longer or shorter. And the most common scenario that people start with is 16 hours not eating, eight hours eating. So maybe they eat between noon and 8pm. And then no food from 8pm until noon. Yeah, that's a fairly common schedule. And then if you want to go more extreme than that, you can shorten the window in which you're eating. I would say the time that I felt and performed the best was approximately one giant meal per day. Sounds crazy. But I would fast anywhere from 20 to 22 hours or something most days, and then I would eat a lot.

SPENCER: I'm imagining you eat like five steaks [laughs]. [inaudible] Is that accurate?

WILL: Well, I consumed an awful lot of dairy. Because if you're at the end of a day, and you just need calories, you could just drink heavy cream. It sounds totally crazy. But you actually can just do that and it works fine. My meals consisted of meat, lots of fat sources from both plant and animal sources. So I'd have lots of coconut milk, I would have olive oil on food, I would have lots of cheese, I would have cream. And then the bulk was a salad, chopped steamed vegetables, or something like that. And I did that for a long time. I felt great. Oh, and nuts. Nuts are totally your friend, you can eat thousands of calories in nuts in one sitting. Which I've done many times.

SPENCER: And what's the theory there of intermittent fasting? Why might that be a good idea?

WILL: I think in general, what a complex system needs to stay healthy is a lot of variation and good stressors. And it's a little bit tricky to tell which stressors are going to cause damage and which stressors cause an adaptive response. But one rough heuristic is: Is it something that we encountered in our evolutionary history such that we have mechanisms in our body to counter it? And this idea of hormesis was actually first developed because people were starting to realize that getting exposure to small amounts of nuclear radiation seemed to make people healthier. And this was very confusing at the time. And today, there are people that still think this is not true. But the paradigm of hormesis as a thing, I think, really took off with that observation. And it really changed the way that people think about the body. And the idea is you're not trying to protect your body, you're trying to stress your body in exactly the right way. And so when you think about the kinds of stressors that your body might have, one of those that I think is pretty obviously compelling is sometimes you'll be starving. And I would say this comes back to how long you want to fast. With intermittent fasting it depends a little bit, but if you look at anthropological studies, there were cultures that basically ate two meals per day and mostly did not graze on food throughout the day. Certainly you can find examples of that. I personally am of the belief that doing longer fasts for multiple days is actually something that's also very good for health, but that is less common.

SPENCER: Like doing it once a month or that kind of thing?

WILL: Yeah. I have actually fasted for 30 days. I did that last year.

SPENCER: Woah. Side note to anyone listening, please do not shoot yourself or anything I can materialize and do not go fast for 30 days unless you really know what you're doing.

WILL: Yeah, that was super intense. And that's not something that I would do often. I have fasted for a week prior to that, that was absolutely fine. And I fasted for three or four days, many, many, many, many times. Obviously, for anyone who has any concern, just don't do it. This is obviously something that is not within current medical practice. I will say though, as a side note, not eating was, in fact, used as a treatment for folks that were morbidly obese mostly back in the 60s and 70s. You can go back and you can find some really cool case studies, actually. And the longest fast ever was a guy who was morbidly obese and he fasted for over a year.

SPENCER: It's really wild to think about. Yeah, and I think they gave him salt tablets and vitamins or something like that?

WILL: Yeah. So he was using a little bit of nutritional yeast for B vitamins and stuff in water that has virtually no calories. It's technically just any amount of protein in that but basically zero calories. They did try giving him some electrolyte supplements briefly, when his numbers were weird, but they basically had no effect. And they just stopped them. I think by the time you've been fasting for over a month, the normal blood value reference ranges are probably not the ones that you want to be using at that point.

SPENCER: A really crazy reframe for me was when I started thinking about body weight as extra days of food. And you can start doing these calculations like, "Wow, I'm carrying around 20 days of food all the time." That's nuts. The carry-on I made is the food on my body. But for him, he literally was carrying more than a year of food on his body, it's just really wild to think about.

WILL: Yeah, and from the perspective of making a healthy, robust, complex system, you need to make some inroads into the spare capacity. Almost everything about your body and your brain is you use it or you lose it. Doing exercise, it's a stressor on your body. If you actually look at exercise on a cellular level, you're making all these free radicals lactate, all this stuff. Why isn't exercise poisonous? Well, it is very slightly poisonous in a way that makes your body stronger. And I would basically say the same thing with a fast. It is a stress on your body, if you measure various sorts of stress hormones, they are elevated, but they're elevated because what those hormones are doing is they're telling your body you have to dip into the stuff that you don't want to let go of. You have to make inroads into the fat.

SPENCER: It makes sense. And the other compounds that you think are interesting, and people should know about?

WILL: We didn't talk about rapamycin. That is one of the more dangerous and edgy compounds to use. It is used in medicine currently. But that's definitely the one that's most far on the dimension of like, "We're just going to turn down your entire metabolism for a while." Very controversial about whether people should be using this. Now there have been some limited investigations of it. Certainly, if you look at compounds that are producing life extension effects in rodents that are already old, probably rapamycin is one of the best. So not talking compounds that start when you're young, compounds you start when you're old.

SPENCER: It has these unfortunate trade-offs.

WILL: Yeah, in humans in medicine, it's used as an immunosuppressant. If you get an organ transplant or something like that those folks tend to be on it chronically. And it does have a number of just more things that we would actually consider side effects. They cause really nasty canker sores. We've no idea why, just random side effects. But basically you're trading off whole organism robustness for some life extension on the margin. And the question is, if you're cycling rapamycin, does that provide you something like fasting. Is that doing the thing where you're applying a stressor to your body, and then removing that and allowing it to compensate? Is that going to get you more health on the margin? The experimental results are pretty compelling, though, again, it really would be nice if we really knew for sure that this worked in humans, but the mechanisms are similar enough, it probably works to some degree. But again, you're talking about a really profound stimulus that you're applying to your body. So I would say this is one of those things which is great for investigational study and if there's some intrepid crazy biohacker that wants to do this to themselves, it's maybe at the point where they could consider doing that for themselves on their own. But that's where I put that asking for Metformin from your doctor off-label is very tame.

SPENCER: Not to overweigh one example, but I do know someone had a really bad reaction to Metformin. I'm sure that can happen to any drug but even now I would say people should be careful. But any other exciting drugs or interventions that we should know about? Do you think we've covered it pretty well?

WILL: In terms of just stuff on the horizon, I would say the biggest thing that has actually let the anti-aging thing go mainstream are drugs that are known as senolytics. And what senolytics do is they kill senescence cells. So in short, what that is, we already discussed how you have these telomeres in your body to stop cells from turning into cancer. Well, what happens when a cell hits the telomere limit, but for some reason, they don't die, they tend to become these things that we call senescence cells, and your body's pretty good at clearing them. But as with everything else, it gets less good at clearing them with age. It does appear they have a couple physiological functions, maybe wound healing, maybe in development. So there are some edge cases where these things are useful. But it does seem with age, they build up in the body. And they just create this overall inflammatory response in the body, basically, constantly. And so folks are now exploring classes of drugs, which will actually kill those cells. That's created a lot of mainstream interest in this idea that we can maybe get off this curve, that maybe we can actually make people healthier and live longer. And I'd say that's actually pretty exciting. Are the current approaches going to work? I don't know. But is it going to be an area of intense investigation from here on out? I think probably, yes, actually.

SPENCER: Very interesting.

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SPENCER: I want to ask you about the efficient market hypothesis. And whether you think that it's not as true today as it once was. Maybe you could start by just briefly mentioning what the efficient market hypothesis is.

WILL: The idea behind the efficient market hypothesis is basically there's a lot of folks out there who are all smarter than you. And they're completely focused on this full-time. And if there's any efficiency in the market, where they could plausibly make money off of it, they've already found it. And so the idea is that at all times, every price basically reflects the true best guess about the value of something. And I think that that's a very compelling argument. And yet, I think a lot of people, especially after the last year, are starting to question if maybe that was ever true.

SPENCER: Yeah. So I think it's such an interesting topic. And I guess I would first just sit back and say that there are these different versions of the efficient market hypothesis that make different claims and have different levels of boldness. So we've got one claim, which basically says: Every price is perfectly rational. It's incorporated all the information that is known about that company, or whatever the asset is, and therefore, you can never do better than just holding an index fund or something like that. And then you can weaken that a little bit. And you can say, "Well, of course, it's not that every price has to be perfectly rational, it just has to be more rational than you could do." Maybe sometimes the market is a little bit irrational, but it's still better than the individual human, so you can never beat it. And then you can weaken it further and say, "Well, maybe if you could somehow invest a bunch of time into finding information nobody else has, maybe you could beat it, but then you're going to be getting some rate of return on that investment time." So maybe you can make some decent wage that way and so on, you can keep weakening and weakening it, but the version of it there that seems strongest to me — it's strongest in the sense of being easiest to defend and it's claiming the least — is that on average, investors aren't going to be in the market because they are the market. That version of it, it's basically like, "Well, yeah, if you think about the market, what is the market?" It consists of all the people investing. And so the average return of all the investors has to be the market return. And so for everyone who's doing better than the market, someone else is doing worse, that version of you just seems very, very strong. And we probably should just accept that.

WILL: I mean that's almost tautologically true to some degree, right?

SPENCER: Yeah, it's almost tautological. You could imagine maybe people put more money into the market sometimes and less other times, if there's more IPOs or less, so there's complicating factors there. But yeah, it's approximately tautologically true that because the average market return is just the average of all investors, it's essentially not a zero sum game, because it doesn't have to be zero. But it's a fixed sum that adds up here.

WILL: I do think there is an interesting question of to what degree it is actually a zero sum game in some sense, certainly excess returns between other traders is.

SPENCER: And then you could at least say, if you don't have any reason to think that you're better than average market participant, then you should probably just buy index funds, because, for every winner, there's a loser, and why would you think that you're gonna be the winner rather than the loser?

WILL: But I would say in that very weak form, though, it still suggests that if you are better than average, you should play the markets, and you will make lots of money. Whereas I feel like when you look at the actual distribution of people's returns, it's actually not very clear, I guess, that there are that many people that can consistently win.

SPENCER: Yeah. So what I would argue is that very dampened down version of the efficient market hypothesis that we were just talking about. If you add a few more facts, it starts looking worse to play in the market. And those facts are that when you trade, you produce a trading commission. So that drags you down. Now we're below average. The more you trade, the more taxes you tend to generate. So now you're dragged down even further. And then, we have to admit the existence of some funds that just have an almost supernatural ability to just beat the market almost every year. And so if we believe that those funds actually have skill — for example, Renaissance technology, their best fund is Medallion whose track record is just unbelievably good — so if you look at those players, you say, "Well, they're doing way, way above average." So that means if you're not one of them, the whole market is actually already below the waterline.

WILL: So it sounds like you think maybe there's a log normal distribution of how good firms are or something.

SPENCER: I guess I would say I think most of them are just doing the average on average, and then a relatively small number have figured out how to systematically do better. I don't know what percent that is, but I don't think it's 50% of them. I think it's significantly smaller than that.

WILL: So I do hear this argument from folks who actually do believe you should trade the market as more and more money just goes into these entirely passive index funds, which is a very large part of the market today. And it looks like it's only growing, does that increase the returns to actively trading?

SPENCER: That's a really good question. I guess one thing you can think about is if you have the entire market equals the sum of all investors. Some of those investors are just doing the passive index thing. They're just trying to match the market return. So let's say they approximately match the return to the whole market as a group, they actually then just lead to a zero sum game or a fixed sum game of all the other participants. So in other words, they factor out of the equation, and now they're just not in the competition, but everyone else is still just playing the same game that sums the same amount.

WILL: Right. So you would still expect there to be some winners and some losers. I guess if those index funds were systematically slightly underperforming for some reason, maybe they were front-run very systematically or something, you could see how maybe they could become a larger share of the losers than the winners or something.

SPENCER: Yeah, that's a great point, if they were being front-run by really fast traders. Or another possibility is: Maybe this huge group of people, they just either want to be in the market or not in the market. They're slashing their money between stocks and bonds in and out, in and out. You could imagine it being possible that they're just really bad at that. On average, they put more money into stocks, the bad times. There's some really disturbing examples of that. There was this mutual fund, I think it was, I want to say, the best performing mutual fund over a 10 year period over all mutual funds. But if you actually look at the average investor return, it was terrible.

WILL: Because they put money in at the worst times.

SPENCER: Like you had a zigzag return. It would go up a bunch and throw their money in. It would go down. Yeah, exactly. And it just had an incredible positive return. But people actually did terribly. Yeah. It's just fascinating.

WILL: It's true. It certainly seems tricky because you see that with fund returns, but on individual stock returns, it seems like momentum is a factor that's been pretty well-validated. So if you've put money in things that have gone up, they tend to continue going up more.

SPENCER: I would just add though, that version of that funds or making money off is probably a pretty sophisticated version of that that's difficult for someone to execute without having studied it really carefully, or something.

WILL: Yeah. Also those on average returns are not massive either. Yeah, I mean, I guess one question is: Do you think that fundamentals, I guess, matter at all? If you look at the stock market's total valuation in the US, it's at pretty high numbers; maybe not literally record high, but up there. Do you think that that thing just doesn't matter?

SPENCER: I was taught a lot about value investing when I was young. For those that don't know about it, basically, the way to look at a stock is as the sum of all its future cash flows. And you ask a question, "Well, if I own this entire business, how much money would I be willing to pay assuming I got to keep the future cash flows of it? Or I could choose to reinvest them if it was strategic?" And there's a lot of appeal to that way of looking at the stock market. And I would say that the strongest appeal of that is that a manager who runs a company and who really wants that to be true, wants their price to reflect the future cash flows. They often can take actions that nudge it in that direction. So for example, let's say that they're trading and their current market price is well below what they think the future cash flows will be. They can start buying up their own shares and try to drive it up to that price, as an example. Or they could start paying out cash flows and dividends until they convince the market that actually this really is a stream of cash flows, we're actually just going to pay you the cash flows that we're going to generate. And so you can just treat this almost like a bond and value it that way. However, if you have a manager that doesn't treat the business at all that way, it raises the question: To what extent can you really model it that way? If there's not a particular catalyst that's going to force the market to value it that way, maybe it just won't.

WILL: And I guess the question is: Is there such a catalyst? If you look at fundamental valuation metrics, from that perspective, something like the payback period, before you make back the investment on the cash flows of a business. I mean, one, that doesn't take into account future growth, because lots of stocks lose money every single year. And yet, they're worth a ton.

SPENCER: Well, in that model, you said, there's different future cash flows that you're hoping to get.

WILL: Of course, yeah. But even then, I guess you would still expect that to affect the valuation of companies relative to each other. But it wouldn't necessarily pin the overall valuation of the entire stock market to any particular level.

SPENCER: Right. I think this is a really important debate of: To what extent are there catalysts that forced the market to value things at this, quote, intrinsic value? And you can imagine some such events. For example, if a company runs out of money and can't raise additional funds, it actually goes to zero or whatever its asset value. That is a catalyst that does tie it in some way to the amount of cash flows. It's not a great catalyst, but it's one. Another one is, if a company gets sold, you're gonna pocket that sale price as an investor. And so that is going to tie the value of the company, at least to what people are willing to pay for it. Now, of course, what we would be willing to pay for that might not be reasonable, but presumably, when one company is buying another, they're at least interested in how much cash am I going to get each year from buying this business.

WILL: Yeah, I suppose the question is just: Do you expect mean reversion of these extremely long-term trends or not? And there are many of them (the overall performance of growth stocks relative to value stocks over the last maybe 10 years). There are many such historical anomalies going on now. But would you bet that those do revert to something like the historical mean, or do you really think that they actually are just these random ratios that we calculated that have absolutely no future bearing?

SPENCER: It's an interesting question. Because historically, for a very long time, people thought that value stocks did better than other stocks on average. Not only did you have that as an average effect across the market, making simple baskets of both value stocks. But of course, there were also the famous successes of people like Warren Buffett, who absolutely blew it out of the water and made incredible returns doing a very traditional value approach. And then yeah, as you pointed out, in recent years, value is not done well. And I think a lot of value investors have closed up shop. And I guess my feeling is that because there are certain things that can make value investing true, you're gonna get a swinging up and down depending on the extent to which those are catalysts. And so for example, if you're in an era where there's a lot of hype, and people are buying based on hype, then value investing won't work nearly as well.

WILL: Though, I feel even trying to raise hype as a factor already makes me think that the whole premise of efficient markets is just out the window. Is that not itself the complete repudiation of the idea that these things are valued based on what they're worth?

SPENCER: Someone did a recent analysis of SPAX, their way of going public on the market, and they were like, "Well, if you look at the way they're being valued, then these companies are projecting. They're going to be the fastest companies in history, we're gonna get to 10 billion in revenue." These kinds of things. The projections are just so unbelievable, and yet people are gobbling these things up

WILL: Or were, it has been a rough few weeks.

SPENCER: I guess that way I think about it is that, a fundamental aspect of human nature is that we are susceptible to hype. And I think that there's a few different psychological forces that go together to create hype. One of them is, we don't want to miss the boat on something that's big. If something's going up a lot, you hear more and more people making money on it. At some point, you start feeling, "Oh, it just keeps going up? Maybe I gotta get involved. FOMO." Another one of these forces is just idolization. Apple fanboys, Tesla fanboys, people really do idolize humans and even companies. And that's not exactly an irrational mode of thinking. And a third one is just herd behavior, which is a really strong psychological force. People just imitate each other. And then the last one I would point to, is (we've touched on this previously), if something keeps happening, people actually stop remembering that it isn't always true. And so if you get in a situation where a company has killed it every year, for 15 years. At some point, people just don't believe it's not gonna happen, even though every trend eventually. And so I would put these four forces and I think those are real. And those times I think the market is more rational are based on the strength of those different forces. But this is all incredibly spoken. I'm curious to hear your reaction to that.

WILL: I mean, it suggests this is a tradable hypothesis. You'd buy the super hype stocks.

SPENCER: Well, would you buy them? Or do you sell them? And that's an interesting question. And I think this is why it's so difficult to make money on something like this, even when you're absolutely convinced that the prices make no sense. And they're driven by hype. Well, what do you do? Do you jump on the bandwagon and hope that the hype continues a little while or do you bet against it and say, "Well, eventually, this is gonna crash down, because there's no fundamentals here. Eventually, the company's gonna run out of money, or whatever." It doesn't make sense. Eventually, rationality will reign and it's genuinely unclear what the right trade is.

WILL: My understanding, though, is that most of the major investors that have made the most money tend to buy into bubbles, not tend to short them.

SPENCER: Yeah, it's an interesting question. Warren Buffett's one of the richest people on Earth, and he certainly didn't buy into bubbles. I don't think he shorted them either. I think he just avoided them.

WILL: Exactly. I think the answer is you never short the bubble. But the question is, do you try to buy in time the bubble? I think one of the great unsolved questions is: What causes it to finally burst? And it's not obvious that anyone has that exact moment to moment knowledge of like, "Nope, it was over today," which makes it exceptionally hard to trade.

SPENCER: I think you've hit on the fundamental issue, which is that you have this incredibly complex, adaptive system that's being driven by weird psychological forces. And you have huge numbers of people all trying to predict when it's gonna be over, because, sure, there are a bunch of people that are just buying into the hype, but there's also a bunch of people that know that this is a bubble, and they're just trying to profit. They're trying to profit and they're all just on a hair trigger and ready to get out as soon as they are convinced that the bubble is over. And then, what dynamic does that make? Well, it went down 5% suddenly. Is that the end of that bubble? Some people think so, some people don't. Maybe it just goes another 5%. And you just don't know until the whole thing collapses.

WILL: So it seems like maybe it's possible that the market is both not rational at times, or often, and yet, it's still not a reliable profit opportunity, even when it's seemingly totally crazy.

SPENCER: I would suspect that there are people that have studied these hype cycles extremely well and have figured out how to reliably profit off of them. But your average person who identifies that this is insane, these prices make no sense, this is all hype, actually would really struggle to make money off of that knowledge.

WILL: It was interesting watching the course of 2020. Because if you looked at the institutional flow of funds, a lot of them were pretty worried about the world. And they stayed out of equities. And it was basically individual investors in record numbers coming to the market. And not just buying stocks, buying calls on stocks, more options than ever. And we saw the average retail investor was outperforming most institutional funds in 2020.

SPENCER: It is wild here.

WILL: I guess the question is: Do you expect that level of insane outperformance to continue over this next year? Or do you have absolutely no idea? Or do you think these hedge fund whiz kids are finally going to just absolutely just wipe them out over this new year?

SPENCER: Well, I certainly have no timing prediction for 2021. I don't know what's gonna happen. But if you're the sort of person that is driven by hype, then you will generally do well, when hype is driving things. Because you're gonna be buying the cool thing. And the cool thing is gonna keep going up because everyone else is buying it. But when the trends reverse, which they will, you will be demolished, unless you're lucky. One thing that I am quite worried about is that over the last 10 years, a whole bunch of people have come to think that it's way easier to make money.

WILL: I concur with that.

SPENCER: Yes, because they happen to buy crypto and crypto went up.

WILL: I see that in my friend circle. It's almost scary. I feel scared for these people.

SPENCER: Me too. I know so many people who happen to buy crypto, the crypto did amazing. And they're like, "Oh, yeah, making 60% returns a year, that's normal." And then, "Oh, I have to pay a 15% fee on this, whatever. That's not a large fee." Do you realize that's almost double what the stock market makes on average in the year? Or have they just happened? Or they just happen to own a bunch of equities. And oh, wow, equities just go up and up and up. That's all equities ever do is just go up? Oh, there was a downturn for COVID. But I helped through that. So yeah, and I think the rise of Robin Hood, it only makes sense in a world where things have just tended to go up. But yeah, if we get hit on hard times, what is going to happen to all the people on Robin Hood.

WILL: I suppose this comes back to a question about the longer term. Maybe we're in a bubble or not, who knows? But forget trying to time that and hype cycles, all that stuff. You have a pot of money, and you're trying to responsibly invest it for the future, you want to have more money in the future than you do now. And then you look at bonds, which in most countries are negative now. And you check stocks and it's all-time high valuations. What do you do as a responsible, level headed investor today?

SPENCER: It's such a difficult problem. I was talking to an investor the other day, and he said that he feels long-term bonds are all risk no return.

WILL: Yeah, exactly.

SPENCER: They pay you nothing. And if interest rates dramatically change they could just drop a rock in price.

WILL: And if inflation picks up, they're also totally screwed.

SPENCER: So to turn your question back around. What do you think about that? What do you think about diversified portfolios in this world?

WILL: I don't know, man, it's scary. I think on some level, I still believe that these trends do mean revert. And that at some point value has to do a little better than growth. Yeah, just very, very broadly. And on some level, I do believe that valuations will come down. On the flip side, though, the question is: What would actually cause that to happen? And as far as I can tell, almost everyone in the world is basically just under the spell. The thing that they should do with their money is just invest it in the stock market and leave it there and never pull it out. And so if you stop thinking about things in terms of fundamental valuations and you just think of them as flows of money, are flows of money going to stop coming from the central bank? Are flows of money gonna stop coming from savers? What did they put it in instead? They're not putting it in bonds, which yield nothing. So does the entire world reset valuations by a massive flight to cash? Most people don't want to hold tons of cash either. So I'm at a loss as to what would actually cause the entire system to reset the valuations. In which case, if everyone is just investing all of their spare money in the S&P 500 why can't it just go up several percent per year forever? It's not obvious that there's any catalyst that would ever stop that from happening.

SPENCER: Well, I think a crisis of confidence, where, at some point, people will ask, "Hmm, is this company gonna run out of money?" When there's a lot of hype, and people are willing to give money freely, then a company with no earnings whatsoever can ride on that for a long time, potentially, and just keep raising cash, when people start getting scared. And they start saying, "Well, okay, but what are your finances like and what's in the bank?" And this is why I think there's an asymmetry here where if you think about value versus non-value, what value in my view has going for it is that at the end of the day, if you've got cash coming in, or cash in the bank, you have power.Whereas if you cut out that stuff, if you look at the Hype Machine stocks, when shit hits the fan, when hype is gone, they have nothing. And so, it feels to me, that does give value asymmetrical advantage. That being said, who's to say? We could have another five or 10 years where value is terrible. And it's very, very unpredictable.

WILL: I think ultimately, that's a good argument for why being invested in unprofitable tech stocks, that maybe still has 10 years to run. But if there is ever a reckoning, they should do very, very, very badly. And so if you want to be a responsible, long-term investor, it's not that the performance of otherwise profitable companies has been bad. It's just not been as good as these crazy runs in tech. So maybe the thing to do is invest in consumer staples and utilities. Those are stocks that have actually done just fine.

SPENCER: Or if you're gonna invest in hyped up things, at least invest in hyped up things that have a real business. Those that make money where, if the hype disappeared, the company would not just immediately go bankrupt.

WILL: Yeah, totally. I think the big tech giants are pretty fundamentally good businesses. And the question is just good business at what valuation. And even if those valuations came down, I don't think Apple suddenly loses money.

SPENCER: Apple and Google. And these are cash machines. They can get overhyped, but there's, obviously, an incredibly valuable business underneath all of that.

WILL: Yes, they have some floor. I guess I would say every business has a floor, but most of them don't have a ceiling. You can always invest at companies that are close to the floor. And I think that's a reasonable way to get decent returns over the future. And I think being a responsible long-term investor in this environment really might mean, look for companies close to the floor, and don't try to chase the hype. Even if you miss out on those games, you're still better off than you are having your money in cash.

SPENCER: What do you think about having a private portfolio in China?

WILL: It's an interesting question. And there's different ways to do it, you can try to buy companies or funds that have exposure to actual Chinese equities. And then you can try to buy the Chinese companies that are listed in the US, but those are somewhat different subsets of the market. You're not actually getting overall exposure to China as China.

SPENCER: I think there are a bunch of China-specific ETFs. Now, I'm not sure exactly what they cover.

WILL: Right but then if you look at it, I think almost all of the public Chinese companies are either these large state-run enterprises, or they're Chinese banks, or they're the Chinese tech companies, at least when I've looked at it. It's hard to get access to the Chinese industrial sector or something like that. I guess I would just caution people,if you're buying some good-looking exchange traded fund, just check what the holdings are, just look at the rough distribution. And I think a lot of these are marketing themselves as something that they're not. And if you want access to Chinese financial institutions, then maybe it's great to buy one of these funds. But if that's not the sector that you think you're buying, you should probably think again.

SPENCER: That makes sense. I've heard that Bridgewater has a thesis that China is such a large and growing part of the world economy, yet it's so rarely owned by investors, especially investors in the US. It's a missing part of people's portfolio. And it was an interesting thesis.

WILL: I mean, it's true, because they also have really extensive ownership requirements and capital controls and stuff. So I actually did one VC investment in a mainland Chinese company and it was the hardest investment that we ever did on just a technical level. I think the fees for the lawyers ended up being a substantial part of the total we put in. I would not underestimate how difficult it is to get exposure. And to some degree, that's what China wants. They are trying to develop and grow, but they're trying to do it their own way. They're trying to do it internally. And they're trying to do it with ownership over themselves. They want to make it hard to have foreign ownership stakes in their country, and they've succeeded. So I think the question is, can you get a proxy to China, maybe it's the countries around China that are the trading partners, maybe it's looking at the raw resources going into China. Again, just looking at it from a flow of funds perspective, there is money going into and out of China, and there's stuff going into and out of China, and you can invest in those flows, even if you can't invest in China, per se.

SPENCER: So you don't think the ETFs are gonna have a substantially high correlation with just the Chinese economy as a whole?

WILL: It's not clear that they do. I mean, even the Chinese domestic stock markets, if you look at it, seem even more prone to crazy stock market bubbles and all kinds of stuff. They're very volatile. And, look, I think to a large degree, this is even true in our country. What percent of the total US economy is done by S&P 500 firms? It's a large part, but it's not all of it. And it's definitely not capturing the overall economic performance of the country.

SPENCER: That's really interesting. Well, this was so fun. Thank you so much for coming on.

WILL: Yes, it's absolutely great. And as always, I feel I could spend two hours on every single subject.

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