Sometimes the most basic advice is the hardest to follow, even when it can save you from losing your reputation, your marriage, or your life. Further, it can be hard to find this kind of advice in books, and we don’t always get it from our parents.

Enter Whitney Tilson. His new book, The Art of Playing Defense: How to Get Ahead by Not Falling Behind, teaches readers how to avoid life’s worst calamities and along the way, develop healthy behaviors.

On Author Hour today, he shares, for example, some of the questions we should ask ourselves when choosing a spouse, he talks about the long-term effects of seemingly innocuous habits on our health and success, and he discusses the simple but profound power of being nice.

Jane Stogdill: Hi, Author Hour listeners. I’m here today with Whitney Tilson, author of The Art of Playing Defense: How to Get Ahead by Not Falling Behind. Whitney, thank you so much for being with us today.

Whitney Tilson: My pleasure.

Jane Stogdill: There’s lots of good advice to dig into here but first, tell me how this book came to be, you’re an investor, how did you come to write a book full of general life advice?

Whitney Tilson: Well, interestingly, it came from teaching an investing seminar a few years ago, I launched a business that I’m no longer in right now called Case Learning. It was after spending nearly 20 years in the hedge fund industry. I closed my hedge funds in late 2017 and the end of that year, pulled together 12 young, either aspiring or just having launched hedge fund managers who are where I was 20 years earlier. So, I put together a full week of trying to teach all the investing lessons that I’ve learned.

During the course of that week, somehow, the topic came up, I mentioned something about how some famous investor that I knew was going through a divorce and what a total calamity that was for him both personally and professionally and they were super interested in that.

These are either newly married or unmarried guys, they were all young men, 12 of them, and so I started sharing some of my observations, having seen more than a dozen close friends and family members go through the calamity of a divorce. They were super interested in that and I kept trying to get back on the topic of how to find cheap stocks and the other materials I prepared, and they were more interested in what I’d learned about both marrying the right person and then, having gotten married, how not to let that marriage go bad.

That led us down a whole series of various calamities to avoid in life, and it occurred to me, my oldest daughter actually sat in on one of the five 12-hour days. I realized, “Wait a second, here I am teaching these young men who were basically all strangers to me these very important life lessons.” You know, the person you marry is probably the most important decision that the average person will make in their lifetime, determining their future happiness and success.

Yet, there are no classes on it. So, how are people supposed to learn other than maybe getting lucky by observation or a parent teaches them? So, I sort of realized I was being a negligent father by teaching these important lessons to a bunch of strangers and not teaching them to my own daughters.

I actually have three daughters, currently aged 25, 22, and 19, and this was a couple of years ago. The idea occurred to me that, I should sit down and write down not only the 12 questions to ask before you marry someone, but all the other advice that I have in life that I just sort of accumulated over my 54 years.

That was the seed that led to ultimately a few years later, this book.

What Not to Do

Jane Stogdill: Yeah, it’s so interesting that this stuff can seem at first glance, really fundamental and basic and yet, we’re not learning it in the places you might expect. I’m interested also that you came to focus on calamities specifically.

You touched on this a little bit in your last answer but can you tell me more about how advice on what to do really came to be focused on advice on what to not do?

Whitney Tilson: Right, it’s interesting because when I first started to write the book, the way I mapped out the table of contents was the first three/four syllables were going to be on the things you should do to be successful and have a happy life, as I mentioned earlier. Marry the right person and then maintain a healthy marriage. Work hard, become a learning machine, have high integrity, treat people with kindness and respect, all those other things.

Yeah, I dove into writing the book for a month or two, and I just ran out of gas. I couldn’t figure out what but for six months, I didn’t write a single word. I finally realized it’s because I was bored by my own book. There are so many books out there that preach about working hard and being nice and doing all these positive things.

What was really interesting and what was new is there aren’t a lot of books out there that focus on the last one-fourth of my book that I had sketched out, which is here are the things you want to avoid, the calamities that can take you down, that can upset all the other things if you do them, but if you mess up by not wearing a helmet when you’re riding your bicycle around and you suffer a brain injury or death when you fall off your bike.

Well, it didn’t matter really that you worked hard and were nice to people, you’re dead, right? As I started, I put together some PowerPoint slides and I started giving some presentations related to what I was writing in my book. What I found is my audience was super interested in the five calamities that I identified that account for probably 98% of all human misery.

I realized that I had the book all backward, that I should focus the book on calamities and on avoiding calamities and then weave in near the end, some of the more positive and upbeat things.

Basically, I inverted the book. This really came from Warren Buffett and Charlie Munger, the two guys who run Berkshire Hathaway, two of the most successful investors of all time. They’re my investing heroes, but they’re also my worldly wisdom heroes. Worldly wisdom, as Charlie Munger in particular talks a lot about it, is about being a well-rounded, well-educated person and understanding not just investing but philosophy and history and engineering. Because you need a broad toolkit to succeed in life. One of his most important teachings was summarized by a little quip he made once which is, “All I want to know is where I’m going to die so I never go there.”

Everybody in the audience, when he made that remark laughed and he said, “No, I’m serious. What most people don’t realize is, once you’ve achieved a certain level of success, your main objective going forward the rest of your life should be how not to screw it up.”

Munger’s always talking about calamities. I really owe him a debt of gratitude for at least planting the seed with me. A lot of his teachings about going through life, instead of going through life how 99% of people do it, which is figuring out how to take the big next step up and how to put another zero on their wealth, et cetera, they should instead be thinking about what the things are I need to do to avoid going back to Go. Then I got very excited about the book again and I cranked it out.

Jane Stogdill: All right, I’m so glad you share that Charlie Munger quote. I really enjoyed that.

It seems like this book is perfect for a graduation gift for kids coming out of college. I remember having that mindset when you’re young, you’re free to do whatever you want. In part, because you don’t have anything to lose, and then as soon as you have something to lose, you have to start thinking more defensively.

Whitney Tilson: Yeah, it’s funny you mentioned that because three weeks from now, my middle daughter is graduating from college. My oldest daughter is three years out of college. My daughters are all three years apart. She’s in a five-plus-year relationship with a great guy so obviously if you’ve been with someone for five years and you’re mid-20s, the idea is this is the person I want to marry and spend the rest of my life with.

My youngest daughter is just going off to college this fall. I wrote this book for my three daughters and if not a single other person reads it but it makes a difference in any of my daughter’s lives, it will have been worth the effort. But I think you’ve correctly identified that the sweet spot for someone reading this book would be someone in their late teens, early to mid-20s but in part, that’s because it reminds me of one of the wisest things I have ever heard Warren Buffett say. He said, “The chains of habit are too light to be felt until they are too heavy to be broken.” What he means is, we, all human beings are sort of defined by their habits, the little things they do.

What they eat, do they regularly exercise, how do they treat other people, do they get a decent amount of sleep? Do they have a habit of regularly reading the New York Times or Washington Post or the Wall Street Journal, and reading good books?

Conversely, have they developed bad habits around drinking, smoking, wasting eight hours a day on video games, right? What’s interesting about these habits is, you can eat cotton candy and guzzle soda for a day and it’s not going to affect you, right? You can be sort of grouchy and unpleasant toward other people and you’re still going to have friends if you just do it for a day.

The problem is if you do it every day if it becomes a habit, good habits feed on themselves, bad habits also feed on themselves, and over time, these little insignificant habits define everything about your life.

Speaking as a 54-year-old, I can tell you, it’s sort of hard to change habits when you’re middle-aged or older-aged, right? It’s much better to develop good habits when you’re young. That said, I’d like to think that I’m capable of improvement, at age 54. I think that my book is full of good advice for people at any age. But no question, I’m glad I’m writing this book now when my daughters are in their late teens to mid-20s as opposed to getting around to writing it 10 years from now because by then, certain things may be too late–they may have married the wrong guy for example.

Avoid These Calamities

Jane Stogdill: All right, speaking of the calamities themselves, I love something you said a few minutes ago about how these five different calamities account for all of life’s misery. I mean, it almost sounds like an ancient Greek philosophical treatus, and I’m wondering, how did you choose these five? How did it come to be these five buckets that everything fits into and what are they?

Whitney Tilson: Yeah, let me briefly just name them, I’m not trying to play a game of suspense with our listeners here but briefly, to answer your question–calamity number one, loss of reputation and/or wealth. Calamity number two, loneliness and/or suffering a permanently impaired relationship with a loved one.

Number three, a bad marriage often ending in divorce. Number four, addiction and abuse. Number five, the death, serious injury, or illness of yourself or a loved one.

How did I come up with this list? Well, honestly, I sort of mixed and matched, the list has changed a little bit over time. For example, calamity number three used to just be divorce, and instead, my wife accurately pointed out, actually, the calamity isn’t the divorce itself, often, that’s a relief valve, it’s the 10 years prior to the divorce that’s the calamity, right?

I definitely tweaked it over time, and I don’t claim that this is based on any kind of big scientific study. I’ve done a lot of reading for example, about addiction and abuse and how common is it, who suffers from it, how to overcome it, et cetera. I’ve studied calamity number five, getting yourself killed or injured. I’ve studied the 10 most common causes of death in the United States, for example, and I list all 10.

A lot of this is based on my own personal experience in the past two or three years, seven of my closest friends and family members including my wife have been in very serious car accidents in which a car was totaled, and someone got a concussion, or in two cases, people died.

I can tell you, there is no greater calamity than having a child die in a car crash in your car. That’s happened to two of my friends. I’ve got a section in there on car safety. Car crashes kill, I don’t know, somewhere around 40,000 Americans every year. That number is small relative to the number of people who die of heart disease and cancer, for example, but you know, I covered that as well. But, I’ve done a deep dive into car safety because it’s just been very personal to me and I think there are a lot of things people can do to greatly reduce the chances of getting in an accident and dying from an accident.

The whole section about marriages, I’ve read some of the literature on it but a lot of it is just my own experience with my own marriage and sharing my experiences. I, fortunately, have had a healthy marriage for almost 30 years now, but my wife and I have had some ups and downs and I share some personal stories. Also, for the marriages that really ended up in train wrecks, without naming people, I share some commonalities. I will acknowledge that some of what I write about relates to myself and my peer group and that I’m a wealthy and successful person.

Some of the problems that we have are sort of one-percenter problems. For example, I have a little section about the seven reasons why making a lot of money increases your chances of divorce. This is of course a high-class problem that doesn’t affect most people, but certainly on the upper east side of New York where I lived, the wealthiest census tract in the United States, often, the divorces I see come from making a lot of money and the problems that can bring.

I will say, I’ve challenged people as I’ve been writing this book for the last three years, I said, “Have I missed anything, can you think of anyone whose life has been ruined that the cause of it does not fall into one of these five calamities?” Neither I nor the people I’ve talked to have been able to come up with anything.

Yeah, these calamities are pretty broad if you think about it. What brings people to ruin, I think my five calamities is pretty well covered.

Jane Stogdill: I have some more general questions for you but I want to talk about calamity one a little bit. Speaking of success, something about human psychology tends to be we get a little bit of success and it changes the way we behave towards others, or maybe we get a little riskier. What can happen? How can people lose their reputation or wealth once they’ve gained and then how can that be avoided?

Whitney Tilson: There are two areas and by the way, all of calamity number one is sort of a problem of one-percenters in that you have to have achieved a reputation and or wealth to lose it. Anyone has a reputation of course, and you certainly don’t want to lose it even if you’re middle class, and not a famous person or not a particularly wealthy person, you still have a reputation and your reputation is certainly one of your most important assets, but it matters obviously a lot more if you are a public figure.

I certainly see it. I open up the newspaper every day and you can see all of the men who’ve been brought down because they harassed women overtime, this is a classic example, or the hedge fund manager who does a thousand trades a year or maybe 10,000 trades a year, in one instance traded on inside information and now, the SCC comes calling and you’re looking at jail time, and getting in the Wall Street Journal being charged with insider trading and boom, your reputation is gone, all of your investors pull their money and you’re ruined.

That would be the reputation side and then the wealth side, sometimes this is tied together. You can lose it if you behaved unethically, and you get thrown in jail, you’re going to lose your reputation and you’re probably going to lose a lot of money. Losing your wealth, I think that applies to everything.

Anyone who’s got any kind of retirement nest egg, there are so many ways that you can be seduced into losing your life savings and we’re seeing it today with bubbles and things like cryptocurrencies and these non-fungible tokens, NFT’s, and the meme stocks earlier this year where average investors trafficking on Reddit message boards were piling into ridiculous stocks–GameStop was the most famous one. It peaked at almost $500 a share and two weeks later was down by 90%.

Average Americans who lost just on that one stock lost well over $10 billion and there were dozens of stocks just like it. I named them all in one of my emails last January, right at the top. That’s sort of a summary of calamity number one.

A lot of this though can be tied to calamity number four, which is addiction and abuse. It often turns out when someone behaves badly and loses their reputation or makes bad decisions, bad financial decisions, like investing in your brother-in-law’s crazy company and losing all your money that way, often being addicted to drugs or alcohol is a factor that leads to terrible decision making. Or it affects calamity number three–nothing will ruin a marriage faster than becoming addicted to drugs or alcohol, for example.

Playing Offense

Jane Stogdill: Yeah, I want to say that at the end of the book there is a big section called playing offense where you share snippets of advice for growth and success in business and in life. It’s not all focusing on what to avoid, there are also some really good life lessons there. I want to ask you about that, but first, I’m wondering if during your research you learned why we so badly need to hear this information again and again–why don’t humans have better car safety? Why are we so risky with substances? Why can’t we just play it safe?

Whitney Tilson: I think the answer is it depends. The single biggest cause of car accidents and injuries and deaths is excess speed. Well, you know Americans particularly, but people in general are always in a hurry, we want to get there soon, it is sort of fun to drive fast, right? You know, the things that can get you into trouble of course can be very exciting and fun. Cheating on your spouse and having an affair, boy, talk about an adrenalin rush or so I’ve heard. I’ve never gone within a million miles of that personally.

Drug use again, I have never experimented with any kind of illegal drug, not even once in my life for the very simple reason that there are only two possible outcomes–I either like it or I don’t and both are bad outcomes. For the same reason, I don’t flirt because the woman that I would be flirting with is going to have one of two responses–she’s either going to welcome it or she’s going to think I’m a creep and both of those are bad outcomes from my perspective.

A lot of avoiding these calamities isn’t rocket science but it’s about what I was talking about earlier about developing good habits. It’s very easy and wonderful to do these things that will get you into trouble, and the thing is, is the first time you do it or the first day you do it nothing bad happens and the second day or the second time you do something, nothing bad happens and actually good things happen. It is sort of fun to get high, so I’ve heard.

You know, I have been drunk a dozen times in my life and I actually have positive memories of the handful of times I have gotten drunk, it’s been with friends celebrating, but you can see how it is very easy to get seduced into a pattern of behavior that over a long period of time just ruins you.

You know, if you want to talk about what is one of the most widespread causes of suffering, I would argue, given the obesity rates in the United States and what I see of elderly people, you know obesity. Half of Americans are overweight and a third are actually obese. Think about what your life is like from age 60 to age 75 or whatever. You’ve shortened your life by 10 years, right? The last 10 to 20 years of your life is you’re winded walking up a set of stairs. In other words, getting into a bad habit, bad habits around diet and exercise, and letting your body fall apart is going to result in difficulty just getting around, and all sorts of other ailments like diabetes and heart disease and so forth that are really going to make the last not just one year of your life, but the last decade or two of your life pretty darn miserable but that didn’t come from a decision you made at age 50 or 60.

That came from developing bad habits in your 20s. Again, I like eating ice cream, I like cotton candy, I like fatty foods and Doritos. By the way, I eat all of those foods but in real moderation. I am careful about my diet and what I put into my body because I know that if I put too much bad stuff into my body, over time, I am going to pay a price. Similarly, I know that if I don’t exercise regularly, I can feel it in my body after just a day or two, but you know, it is sort of nice just sitting there on the sofa and binge-watching whatever is on Netflix and eating Doritos.

That feels good in the short term, but it will kill you. It will make you miserable for decades at the end of your life if you get into those kinds of bad habits, but it is very easy to see how you can get into those bad habits because number one, it feels good at the time and number two is, is the consequences may not be seen or felt until long into the future.

Jane Stogdill: Thinking about the long game seems to be a lot of it instead of just living in the moment.

Whitney Tilson: Yeah, just being careful and deliberate about the most important things in life, taking care of your body, which is a combination of diet and exercise, protecting your body in very simple things. I mean it is so obvious to say wear a fricking seatbelt, but do you know that half of all auto fatalities are the 15% of people who weren’t wearing their seatbelt? Don’t smoke, don’t use drugs, the most famous long-term study ever done of Harvard men from 1928, you know they have been following them for almost 100 years.

Most of them have passed away, the single thing, if you think about it, you know Harvard men in the 1920s, now that’s a group of people who you think were going to be super successful overtime and most of them were. The ones who had broken, ruined lives, the number one reason for it was problems with alcohol. A lot of this advice is I’m putting down in writing what everybody already knows, but maybe by putting it down in writing and telling a few stories about it and citing a couple of studies like the Harvard study, maybe one or two lights might go on in the minds of my readers and they might adjust a few of their habits in a way that over a long period of time, might materially improve their life outcomes.

Jane Stogdill: Well, speaking of developing good habits that’s something you’ve discussed in this last section of the book about playing offense. Before we go, I want to give listeners a little idea of some of the cool pieces of advice in here. For example, you have a section titled Be Nice–I love it.

Whitney Tilson: Yeah. I sort of stole that idea from KIPP Charter Schools, which I’ve been on the board of for more than 20 years here in New York. Their motto used to be, they’ve retired it now but it was Work Hard Be Nice. Having a strong work ethic and being nice to people as you go through life, are two of the really most important things.

For example, in question number one of the 12 questions to ask before you marry somebody–I’m not going to read all 12 right here because it is really about 50 questions that I boil down into 12 questions–but question number one is, “Are they a warm, kind, and good-hearted person both toward you and others?”

Do they have a mean bone in their body? How do they treat people like employees, waiters, and taxi drivers? Do children and dogs like them? That’s all those questions I boil into question number one, and there is a reason it’s number one. I think it’s the most important thing to look for in another person, whether you’re going to marry them or be friends with them or want to spend any time with them.

Jane Stogdill: I would love also just to mention one more, you ended this section with how to apologize. I can’t think of anybody who doesn’t need to read these five specific things to think about when apologizing.

Whitney Tilson: Yes. I am flipping through the book so I can read it correctly but yeah, here we go. Here are the five steps, I’ll just read the five points here.

How many times have you seen someone do something really offensive and then make a mealy mild, “I’m sorry if anyone was offended,” apology? That just makes things worse. There are five steps to any good apology. Number one, express remorse. Every apology needs to start with two magic words, “I’m sorry” or “I apologize.” Don’t say, “I’m sorry if you were offended.”

Number two, admit responsibility for what you did and how it harmed the person to whom you’re apologizing. Number three, make amends. Is there anything you can do to fix it? If you’re not sure, ask, then do it. Number four, promise that it won’t happen again and number five, learn from it so that it won’t really happen again. My whole life has been characterized by a series of putting my foot into my mouth and saying or doing things that got other people mad at me.

As a kid, I had ADHD and was a totally hyperactive, out-of-control kid who was always irritating the heck out of everybody. I was not a popular kid at all because of my hyperactivity combined with sort of an arrogant/obnoxious streak. You know, everybody makes mistakes. Everybody,  even the best people inadvertently do things that hurt someone else’s feelings or just upset somebody or whatever.

The key is obviously, number one, try to minimize your error rate. There is a huge difference seeing a 5% or 1% and a one basis point, one in one hundred, that one percent error rate, right?

But number two is, is when you do mess up, you have to quickly acknowledge it to yourself and recognize, number one, that, “Hey, I messed up here,” and then number two, you have to do your best to fix it. Apologize to the person you’ve hurt or offended and fix it to the extent that you’re able, or if you can’t fix it, if the damage is done, at least say, “I’m sorry, it won’t happen again.” and then make sure it doesn’t happen again.

Charlie Munger has a funny saying. He says, if it’s trite, it’s right. You know, a lot of this stuff is just really trite, really obvious. Generally, I run into people all the time who are gobsmacked by you screwed up, just own it. Just say, “I screwed up. I’m sorry. It won’t happen again,” boom, done, that’s all you have to do to fix the problem. Instead, they dig in their heels, they make excuses, and they cast blame on somebody else and it’s just crazy.

Jane Stogdill: We are driven by lots of impulses that can be quelled in part by reading this book and Whitney, it has been a pleasure speaking with you. Congratulations on the book and again listeners, the book is The Art of Playing Defense: How to Get Ahead by Not Falling Behind. Whitney, in addition to reading the book, where can people go to learn more about you and your work?

Whitney Tilson: Well, I’m actually not an author by trade. I am in the investment newsletter business after being in the hedge fund business for almost 20 years. My business is Empire Financial Research. I send out a free daily to 140,000 people with my latest thoughts on investing but I actually weave in a lot of the stuff from this book. It is usually at the end of my daily emails. You just go to empirefinancialresearch.com and you can enter your email address there and it is a free daily that goes out every weekday that the market is open. That is where I suggest if they want to follow me on a daily basis.

Jane Stogdill: Great, thanks so much.

Whitney Tilson: My pleasure.