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Chapter 1: What historical investing principles are still relevant today?
So from the George Washington administration until Michael Jackson's Thriller album, dividends were 90 something percent of returns and price movement was very little of a gain. And since then, I think well over 70% of our investment returns come not from dividends, but from price elevation.
That was historian, investor, and author Joseph Moore discussing his new book, How to Get Rich in American History, 300 years of financial advice that worked and didn't. I'm Motley Fool producer Matt Greer. My colleague Rich Lumello recently talked with Moore about all of that financial advice and about some timeless lessons for today's investor. Enjoy.
Welcome to Motley Fool Conversations. I am Motley Fool contributor, Rich Lamella. Our guest today is someone who brings a rare combination of perspectives to the world of investing. Dr. Joseph Moore is an author, historian, and investor who didn't start out believing in the American dream,
Chapter 2: How did Joseph Moore's background influence his investment philosophy?
But through his own experience in the markets, he's come to see it as not only real, but also achievable. In our conversation today, we're going to explore the strategies, decisions, and lessons behind his investing success, including some surprising approaches that paid off and others that didn't.
We'll also dig into what history can teach us about markets today and how everyday investors can apply those insights in a practical way. Dr. Moore, welcome to The Motley Fool. I'm so glad to be here. Thank you, Rich. Great. Well, you have just published a book called How to Get Rich in American History, 300 Years of Advice That Worked and Didn't.
And so I look forward to kind of jumping into the thoughts around that and kind of pull out some anecdotes and some investing wisdom for our Fool investors. But before we do that, why don't you just give us a couple of minutes of kind of your background?
Chapter 3: What lessons can modern investors learn from Teddy Roosevelt's cattle farm disaster?
Yeah, thank you. So I was getting a PhD in American history. I came from a very rural, working-class family in the South, right? My mother was brought home to a house with no flush toilet, and she was the sixth child, right? So on my father's side, they were active resistors to capitalism, as it were.
These were mill strikers who had—the Communist Party had sent activists down South to teach people, you know, dumb rednecks to read the Communist Manifesto. Those rednecks were micro— my great grandparents and they like, you know, charge the mills and these kinds of things. So like my dad growing up would vote communist for president.
So I did not enter through the door of believing in capitalism.
Chapter 4: How does Airbnbing rooms relate to historical investment strategies?
And so I was getting a PhD in history and I did all the same things that all that you hear professors do. I assigned Karl Marx on day one, all the, you know, but not Adam Smith. But for some reason at that time, it was 2005, someone said, well, the lesson of history is clear. You need to buy a house. And instead of thinking about that for a hot second, I just nodded my head. We bought a house.
We're graduate students, right? I mean, this is the no verification loan world. Then a friend of ours was going to lead a financial class at the local church. He was like, would you come?
Chapter 5: What surprising strategies did Joseph Moore discover while investing?
I said, absolutely not. I'm smart. I don't need this stuff. Plus, it's all a scam anyway. And he said, would you just do me a favor? Because I'm scared I'm going to be embarrassed if only like two people show up. So we went to help a friend, and they make us do a budget. We go home, we fill it out, and my wife falls asleep, and I stayed up literally all night. It was like, who gave us a mortgage?
We have no money.
Chapter 6: Why is the concept of compound interest considered a modern phenomenon?
And so we put our house on the market on, I think, a Friday or Saturday. It sold the next Saturday in a bidding war. Our neighbor put her house on the market the following Saturday. It never sold. We were the last people off the 2008 Titanic. And I was floored and humbled and embarrassed that I thought I knew so much history. And a friend's class in a church basement had taught me
more than any book I was reading. And I thought there has to be a history here. And so I set out on a quest to understand, like, what were people told to do with their money?
Chapter 7: What mistakes should novice investors avoid according to history?
For 300 years, Americans have been told, this is how you get ahead. But what were they being told? Was it always the same thing? Did it change? And what I discovered, the longer I explored it, was actually people really did get ahead, which I was actively in the process of teaching students you couldn't do. And that seemed like a problem, right?
And so then I started experimenting with these various things. I thought, well, if people did it in the past, I'm going to try it in the present. And the only line that was drawn in the sand was my wife saying, under no circumstances. Like if we hit that line, then I would back off.
Chapter 8: What resources does Joseph Moore recommend for understanding investments?
But I Airbnb'd all the rooms in my house because that was the primary mortgage payoff strategy in the 1800s. I shorted all of Jim Cramer's stock picks because there's an economics paper saying that there's this thing called the Cramer bounce. But over time, I started to realize, oh, actually people can get ahead. And this was quite embarrassing for someone who was arguing the opposite.
And so now I've created what I hope is a very helpful history for people. This is what people were told to do in the past. And these are the things that work. These are the things that didn't. And hopefully we can apply those today.
As you embarked on this, you didn't have a history of investing. Sounds like far from it. What were some of the initial principles that you kind of started looking into that started to guide your investing? Because it's kind of fascinating. You start going down all kinds of different paths. You mentioned Short and Kramer. I mean, you invest on the moon. You start to play crypto.
You start to, you know, kind of dabble in a lot of different things. Is this the academic in you kind of thinking, you know what? I'm going to throw stuff at the wall, 30 different things, and just see what works and what doesn't work.
Yes. I wanted to test all the assumptions. And that was where academia came in very handy, is there is a baseline system of saying, this is the proposition. Can we test the thesis? And I wanted to test it in two ways. In one way, I wanted to test it by saying, did this work for people in their real lives? And then I wanted to see if I could do it in the present and see if it still worked now.
One of the conclusions that really struck me the more I did the work was how many things we think are old that are actually very new and how many things we think are very new are actually very old. So to give an example, we think that everyone always got ahead by using compound interest, right?
This is if you just walk into your generic financial advisor, the message will be compound interest is the magic superpower that's going to get you where you want to go. I argue in the book that's actually a very new phenomenon, because if you go back through most of American history, compound interest is not how people actually got ahead. Compound interest depends on two things.
Time, 99% of Warren Buffett's wealth, I think the stat goes, was made after his 65th birthday. That's a birthday most Americans never lived to see. So time was not on their side. And secondly, most of their wealth was in land, which doesn't compound. So, you know, we all get this experience of going into the financial advisor, right? And they slide across what I call the chart.
And, you know, it doesn't matter when you go. It's always the same chart. The dates have changed. Mine was 1929, $10,000 invested in 19. The guy said a mere, I remember him saying a mere $10,000 invested in 1929 would today be worth more than $10 million. And he slides this across to me, expecting me to be blown away. And I looked down and I thought, okay, a house did not cost $10,000 in 1929.
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