Michael Lewis on How to Spot the Real Expert

In this podcast, Motley Fool analysts Ron Gross and Jason Moser discuss:

• How history shows staying invested through downturns pays off in the long run.
• Major retailers struggling with inventory.
• Signs of strength in the home improvement industry.
• Two stocks on their radar: Costco (COST 1.01%) and Marqeta (MQ 4.05%).

Best-selling author Michael Lewis shares insights from the latest season of his podcast, Against The Rules, and discusses:

• Why he chose "expertise" as the theme for this season's episodes.
• How you can spot a real expert.
• What CEOs can learn from their employees who are six levels down.
• His thoughts on cryptocurrency and non-fungible tokens (NFTs).
• The experience of going back to reread his first book, Liar's Poker.

The Motley Fool Investing Starter Kit includes recommendations of 15 stocks and five exchange-traded funds (ETFs). Get a free copy here: http://fool.com/starterkit

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on May 20, 2022.

Chris Hill: [MUSIC] Michael Lewis is the best nonfiction writer in America and he's here on this show. Motley Fool Money starts now. [MUSIC]

Speaker 1: Everybody needs money. That's why they call it money. [MUSIC] Motley fool global headquarters, this is Motley Fool Money.

Chris Hill: It's Motley Fool Money radio show. I'm Chris Hill, I'm joined by Motley Fool Senior Analyst Jason Moser and Ron Gross. Good to see you as always, gentlemen.

Ron Gross: Hey.

Jason Moser: How're you doing, Chris?

Chris Hill: We've got the latest headlines from Wall Street. Bestselling author Michael Lewis is our guest. As always, we've got a couple of stocks on our radar. But we begin with more red in the markets. This marked the seventh week in a row that both the S&P 500 and the Nasdaq fell, and the eighth straight weeks of the Dow falling, and Ron, like every investor who's hanging in there, we are feeling this pain.

Ron Gross: Boy, oh boy, tough times, Chris. S&P down 20 percent now from its high, Nasdaq down 30 percent from it's high. Trying times for sure. There are days when the market is strong and I say to myself, OK, we're coming out of this, and then the market plummets four percent the next day and almost invariably happens. Those are really those whiplash days, when I call them. Those are what really get to me because they toy with your emotions where you think things are getting better then they're not, and then you think and then they're not. You have to maybe pull yourself away from the day-to-day action, I think to alleviate some of that. In this environment, investors are trying to figure out where valuations should be, but because of the macro environment we're in, it's really tough to do.

What do you do? I personally, I've been buying consistently, not just stocks, but broad-based ETFs also. I try not to look at my accounts too often and I also recommend others do the same. Truth be told, I'm not that good at that, [laughs] I do focus on it. But do what I say know what I do. But what I really do is I take heart in the rebound in my portfolio after past corrections. The bursting of the dot-com bubble, 9-11, the Great Recession, the COVID crash. Time really should heal all stock market wounds, you just have to stick with it. That's essential, I think that's really the message.

Chris Hill: Jason on Friday, DoorDash announced $400 million stock buyback program. I saw that and I thought, wait a minute, if DoorDash is buying back stock, am I wrong in thinking that we're going to see larger, much more profitable companies doing the same thing with their cash?

Jason Moser: I don't know that you are necessarily wrong. I mean, I guess that remains to be seen. We did see Alphabet recently announced a very large share repurchase authorization. Historically, there's plenty of data out there that shows that specifically times like these, is when we see a lot of companies start pinching the purse strings, so to speak, as opposed to repurchasing shares opportunistically. They're getting it wrong, they're getting it backward. It really does depend on the company. But I don't know that DoorDash necessarily is best served by repurchasing shares today, it feels to me like that's a business where they could invest that capital a bit more wisely. But I suspect we will see some businesses that they're definitely taking advantage of the situation. Hopefully at least.

Chris Hill: It was a big week for the retail industry, both Walmart (WMT -1.75%) and Target (TGT -0.36%) issuing first-quarter reports and both stocks getting hammered. Walmart was down 20 percent this week, Target shares falling 30 percent. Ron, this was surprising for a couple of reasons. One of them being Target CEO, Brian Cornell admitting they did a bad job with inventory management and having the right mix of merchandise.

Ron Gross: Yeah, there were some macro factors here, but some unforced errors as well. It's a tale of inflation and supply chain problems which we should all be used to by now. But also changing consumer preferences and the inventory and merchandise management that is necessary, that is crucial to get that right, and it also is probably the most difficult thing to do for retailers. As you mentioned, on the call CEO Brian Cornell of Target said, while we anticipated a post stimulus slowdown and we expected consumers to continue refocusing spending away from goods and into services, we didn't anticipate the magnitude of that shift. That really ended up crushing the bottom-line, exacerbating it was higher fuel and freight costs.

The company underestimated how bad supply chain constraints would be, Target will have to spend one billion dollars more on freight than it expected, for example. Lockdowns in China certainly not helping, creating congestion at Asian seaports, rising gas prices have driven up the cost of trucking. There's almost nothing good in this report, which is why you saw the stock gets smack 25-ish percent. It's a big number. But as you said, I think the biggest unforced error was merchandising. Target over ordered big bulky home goods like patio furniture, TVs, kitchen appliances. Those are expensive to ship, they over-ordered, they didn't have the warehouses for the stuff, so they had to rent new warehouse spaces at incredibly high prices to store the excess inventory, and then they had to cut prices to get the stuff out the door.

That's an incredible double-whammy right there. The steep discounts there were responsible for most of Target's lost profits. Operating margins were down, only bright spots for food and beauty for Target and adjusted earnings fell 41 percent. A lot of the same story for Walmart. More talk, I think in Walmart's report about inflation and less about merchandising if there was one big difference. But Walmart hurt by higher-product, supply chain, employee costs, inventory levels also rose too fast up 33 percent, US comp sales only up three percent, net income fell 25 percent. Both companies cut guidance. These are still very strong companies. They'll get through this. They got to work through those merchandising problems. That could take a while and there could be promotional activity and lower margins as a result for a couple, or at least a couple of quarters. That's what we should really be keeping an eye on.

Chris Hill: One of the thing with Walmart, and we heard something similar out of Amazon recently has to do with hiring. They basically said we over hired, which is interesting as we're heading into the summer and the next time we get an earnings report from Walmart, part of that report is going to be them sharing what they're expecting for back-to-school and what they're expecting for the holidays.

Ron Gross: Exactly. With Walmart, they underestimated the speed at which employees would come back after COVID started to wane, and so they had, quite frankly just too many people. A lot of that has been taken care of due to attrition over the last several months, but I still think they have a little bit of the way to go. But lots of important seasons are always right around the corner, they have to be well staffed, they have to have the right merchandise, both of these companies. I think they'll get there. These are I think still fine companies to own, they pay dividends they have for years, trading Target 13 times, Walmart,18 times, that incredibly expensive. I think you're OK if you're owners of these companies.

Chris Hill: The home improvement industry seemed to fare a little better. Home Depot (HD 0.86%) and Lowe's both out with their first-quarter report. Home Depot actually raised guidance for the full fiscal year and despite some headwinds, Lowe's maintained their full-year guidance, Jason, so if you're looking for silver linings, looks like we found a couple in the home improvement industry.

Jason Moser: [laughs] Definitely a bit of a different and more resilient consumer year in the home improvement space. They are finding interest in the low locked in mortgages, are still a benefit to home improvement. People were starting to weigh moving versus staying put. A lot of people are just deciding to stay put and remodel. I think it's also worth remembering there were tailwinds from last year that didn't exist this time around from stimulus and pent-up demand. I think that actually makes the results that both companies turned in even more respectable. But you look at Home Depot, I mean, definitely still signs of a strong consumer demand exceeding their expectations, noting the project backlogs are very healthy.

If you look at sales, sales up 3.8 percent from the same period last year, comps were up 2.2 percent with the US comps positive 1.7 percent. Again, you look back at last year. Last year in that same quarter, they delivered the highest first-quarter sales in the company's history. That was a tough hurdle. Comp average ticket was u p 11.2 percent, transactions fell 8.4 percent. Not terribly surprising that we're seeing a lot of impact there from inflation on those actual tickets. Gross margin maintaining, I think, they've been warning of some compression issue. They saw 20-basis-point compression from last year that was driven mainly by supply chain investments and pressure from lumber that resulted in operating margin down just 20 basis points as well. Inventory starting to normalize, and like you said, offering a confident outlook for the full year, actually raising guidance a little bit.

They're calling for comp sales growth in the neighborhood of three percent for the full-year. With Lowe's, I think a lot of the same thing, maybe not quite as robust, but I think it's worth remembering. Certainly, Home Depot has a larger store footprint with greater total square footage. I think that plays into their advantage. Lowe's is also a bit more reliant on the do-it-yourself customer. There is some weakness there, not only with Lowe's I mean, Home Depot, witnessed the the same thing, and that was really just a delayed beginning to spring. Some late cold and wet weather that really delayed the start to spring, so to speak. Lowe's results a little bit more pressure there. Total sales down slightly, comps down four percent, US comps down 3.8 percent. They were able to manage costs a little bit better though.

The margin picture looking a little bit stronger there. Then the same dynamic there in average ticket growing 9.1 percent. That was driven in part by higher pro sales. They saw transaction count decline 13.1 percent. Same idea there with inventory, those are starting to normalize a little bit. They reaffirmed guidance for the year. Essentially, it's basically flat in coming up against such a strong quarter last year and such a strong year last year, I think all things considered a very respectable as well. Both stocks down around 30 percent so far this year alone. We know that home improvement represents a very large and in a very resilient market opportunity. I encourage investors to keep both of these ideas in mind. You get a dividend aristocrat in Bose, and it's a strong yield there in Home Depot as well. I think I noted on the last week's show Home Depot, that's one of my latest purchases there. Chris, I opened up a position in Home Depot and look forward to owning those shares but hopefully many years to come.

Chris Hill: All right. Because there is so much to talk about with Michael Lewis, we are breaking our usual format Radar Stocks coming much earlier in the show than usual. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week?

Ron Gross: Costco, COST, consistently one of my favorite companies. I love it's subscription based revenue model, the value profit of it's customers, it's pricing power and to that end. Expect a price hike in the membership subscription pretty soon, I would think. Employee and customer friendly culture. I've owned it since 2008. It's been too pricey of late to add to my position, but now with the stock down we're getting more to a reasonable valuation. I'm hoping soon where I can add to my Costco position, because it is one of the best running companies, I think, in the US.

Chris Hill: Dan, question about Costco?

Dan Boyd: Now, this week I saw on Twitter a fake news story. This was fake. I should point out, it was fake. That they were raising the price of the hotdog in the combo meal, the one dollar hotdog combo meal at Costco. Again, this was fake, but Ron, did you see this? If you did, did you freak out?

Ron Gross: Yes, I did because Jim Sinegal [laughs] said it would never happen while he was still alive, and he is still alive. I was thrilled to see that it was fake.

Chris Hill: Jason Moser, what are you looking at this week?

Jason Moser: Yeah. Just keeping an eye on Marqeta, MQ. Recently came out with strong earnings results here in for, as a reminder Marqeta, it's a modern day card issuing and transaction platform. They are offering the transaction processing and card issuing through its OpenAPI and SDK software developer kits. Ultimately, Marqeta allows its customers to create customized payment programs around the world. Remember I'm talking about customers and big customers like Uber, DoorDash, Block and more. Total processing volume for the quarter $37 billion was up 53 percent from a year ago. As I was noting with home improvement space, it's worth noting because a year ago there were some tailwinds there that just didn't exist this time around. One of the things we'll be keeping an eye on as revenue concentration with Block that continues to come down, which is very encouraging, customer-centric leadership. I like this one and have recently added to it as well.

Chris Hill: Dan, question about Marqeta?

Dan Boyd: Jason, would you put this stock in your war on cash basket?

Jason Moser: It's not at the war on cash basket, but it may just go with the war on cash part deal.

Chris Hill: What do you want to add to that watch list, Dan?

Dan Boyd: Well, I've never heard of Marqeta and I have no idea what FinTech stocks do like ever. I'm just going to go with Costco, because I've been there.

Chris Hill: Nice. Ron Gross, Jason Moser, guys, thanks for being here.

Ron Gross: Thank you.

Chris Hill: Up next, the conversation with the one and only Michael Lewis. Stay right here. This is Motley Fool Money. [MUSIC]

Welcome back to Motley Fool Money. I'm Chris Hill. Michael Lewis is the author of numerous best-sellers, including Liar's Poker, The Big Short Moneyball and The Premonition. He is also the creator of the hit podcast, Against the Rules, which is now in its third season. Michael, thanks for being here.

Michael Lewis: Thank you, Chris. Good to see you.

Chris Hill: There is a lot of want to get to. Let's start with the podcast. Against the Rules is a podcast that examine unfairness in American life. The theme for the new season is, Experts. Which seems like a topic that has fascinated you for a long time. The Big Short is the story about the financial crisis since 2008, but it's really told through the lens of the few people who have the ability to see what was coming when so many people on Wall Street did not. Moneyball is about seeing value in baseball players, when many teams don't see that value. I'm sure there are other topics you considered as a theme for this season, what made you choose Expertise?

Michael Lewis: The conceit for the whole podcast, all three seasons, in the fourth season, and the fifth or however many we go, is that we were picking a role in American life that had some volatility to it. Asking like, what's become of it and why. The first season was about referees, the second season was about coaches. They were actually like a list of six to choose from when we got to this season. I can think of three reasons why we landed on Experts. One was my daughter, who's a junior in college right now, was all over me on the subject because has been for the last few years deep into Climate Change Research. Anybody who cares about climate change, especially young people who stumble in it for the first time, are shocked by the consensus among the experts about what's happening and the inability of the American population to grasp it [laughs] and that disconnect.

It's like we figured it out, but we're not internalizing it. She was the first one who picked off the list of experts. She said, you got to do that. That's why thinking about it and I thought. I mean, I hate to put it this way, but thought this could be easy because this is in fact what I've done my whole career. It's go and find experts. I think in my interest in the subject, in a really serious way, it goes back to Liar's Poker. It goes back to like I'm on Wall Street, I know nothing. I mean, and I know I know nothing, and I'm put on the phone with professional money managers, and I'm trying to persuade them to do things with money as if I'm an expert and everybody agrees to treat me as an expert. They move their money because of things I say, which is insane.

Then I go and write a book about how insane it all was, how no one should consider me an expert in financial matters. Ever since then, whenever I'm in public, people ask me what to do with their money. It was such a bizarre dramatization of the inability of people to see who is an expert and who is not an expert. Their hunger for expertise in the case of like stock-picking, I mean, I forgive them. The Fool is an exception, but in the case of like a short-term move in the stock prices, there is no real expertise. People are running around pretending to know what they're doing with that, so that was a second reason. The third reason was, you mentioned some of the books, but if you wanted to make an argument about what's the mechanism in the middle of all my books.

I'm trying to think of it as a counter example, but in most cases, it's me wondering around some small world and finding the person who's the actual expert and who no one's really identified as the expert or who is not getting sufficient attention for their expertise. Then over and over again, there was this literary arbitrage where I could find someone who could illuminate a world, whether it's professional baseball or the financial crisis or the pandemic, whatever it is. Who people didn't know. Who is an obscure character, because they really had not been up on earth before in this particular way. Because their powers have not been completely appreciated. Well, there is a lot there and this is not unfamiliar turf for them.

Chris Hill: Coming up. Michael Lewis shares how to spot the real expert in any situation. You're listening to Motley Fool Money. [MUSIC]

Welcome back to Motley Fool Money. I'm Chris Hill. Our guest is Michael Lewis, best-selling author and creator of the hip podcast, Against the Rules, now in its third season. I like the fact that I think the first episode of Season 3, you played an audio clip of a radio interview from when you're on a book tour for Liar's Poker, 30 plus years ago. You were getting these questions demonstrating, it reminded me of a friend of mine who's a financial analyst. He had done a television live hit of some sort. I asked him how it went and he just smiled and said, "You know it was great. Do you know why?" I said, "No, why?" He said, "Because they called me an expert. It's the only place in my life anyone ever [laughs] calls me an expert." He's like, "My wife doesn't think I'm an expert, my kids don't think I'm an expert, but if I go on television, they call me an expert."

Michael Lewis: You're on TV because you're an expert. You're on TV even for two actually contradictory reasons. The ability to hold you for the television people to hold you out as an expert and your willingness to be sound completely certain about something you don't know anything about, or to be completely certain about, something that maybe you know something about, but not everything about. Every time I go on book tour this happens. People want me to come on like Cable News and talk about stuff that I don't know any about. I happen to have a book out about X, but they want me to talk about Y, Z, and A and B. I'll say, look, I don't really know anything about that. That's not the answer they want to hear. What they want to hear is, I can answer that question, me. I was kicking around with the producers after we just finished the last episode of the season, which will layer in two or three weeks.

They're dropping one a week. But when we were setting this shooting, about what this was all about, one of the producers said, if we're to summarize this whole season, in a sense, it would be, you can recognize the expert because he or she is the one who is not totally certain and is really quick to say, I don't know. If you want to find the person who actually doesn't really know what they're talking about, look for total certainty and look for people who don't admit they don't know things. TV, this isn't friendly to that. The TV doesn't want you on TV saying, I don't know the answer. Why are you on TV then? We opened with those clips from Liar's Poker because as we were starting thing I said, it could not be a more a clear cut example of the problems we have in our media environment with presenting expertise to the public. The whole of Liar's Poker was a dramatization of my ignorance. A dramatization of, if you're going to listen to anybody about money, don't make it be me. I clearly don't know what I'm to talking about. These interviewers over and over are saying, which way is the stock market going? Or which should I invest in now? It was a madness. Anyway, we open with that, but we quickly get to the subject at hand.

Chris Hill: When you think about expertise being hidden, this is something that comes up in the very first episode of the season, an episode called Six Levels Down. I have a couple of questions about it. But before that, for people who have not yet listened to the episode, and I can't encourage people enough to do so, can you give a summary of what the episode explores? Because Six Levels Down, I listened to that episode twice, and the second time through I thought about it, just from the standpoint of investing, and I feel like it is an episode that every CEO of every public company should listen to.

Michael Lewis: The general idea was, and it is an idea that I stumbled across while I was working on the most recent book on the premonition, that, in complicated systems, a big corporation, a federal government agency, a state government, whatever it is, a big system, when there is a crisis or a problem, the person who has the expertise to respond to that, the answer to the question is very seldom, the person who's running the operation, very seldom, the person underneath that person. That often it's someone who's six levels down on the organization chart, who has a very specific knowledge, and some way this is revealing something is generally true about expertise. It's quiet and local. People who really know something are spending their time learning about that thing, and not advertising their expertise, not being big picture people. They're little picture people.

You need to find the right little picture person six levels down in your organization to answer the question that happens. The idea was introduced to me by an entrepreneur who also public server, fellow named Todd Park. Extraordinary character. He's created three different multi-billion-dollar companies in healthcare. He was this chief technology officer for the United States brought in by Obama, and dealt with multiple crises at the federal government. He was filling my ear about this, while I was working on the premonition. I stumbled into him when I was working on the book. At that moment, he was looking for the expertise to help Governor Gavin Newsom in California figure out how to respond to COVID back in March of 2020. He found it six levels down in the California state government, and that woman he found happened to be the main character of the book.

But leave that to one side. I was talking to myself, well, how did you even know to go looking in the bowels of the state government for this particular pandemic expertise? He said, well, Michael, he said, my whole career, entire career, has been premised on this understanding, and I myself only accidently came across this understanding. He was 24, 25-years old, fresh out of the Harvard Business School. He was a Mckinsey consultant, wanted to start his own business, formed a business with a friend. The idea for the business was we're going to make pregnancy better for women and reduce catastrophic outcomes. Make the whole thing, care for the mom better from conception to birth, and it will actually reduce healthcare costs, because they will have been so well taken care of. That there are not going to be the really bad outcomes at the end. They buy a maternity clinic in San Diego to try their idea out. It's a disaster.

The insurers don't want to pay for preventative care. Nobody gets the idea. However, while they're managing this disaster, losing like a million dollars a year on this clinic, they realized that, oh, there's this other problem. The health clinic we bought is losing all this money, because it's not even getting paid for the stuff it's doing by insurance companies. Because the insurance billing has gotten so complicated, that half our bills are just rejected, because we put the wrong item on the wrong line. They realized, oh, we're in the wrong business. We need to be in the business of figuring out how do I get doctors and hospitals paid. It turns out it's like a national crisis at that time. It's the 1990s, insurance and complexity is exploding. There are like 18 different healthcare plans in 50 different insurance companies, and each one has all these permutations on it. Everybody is having trouble getting paid.

They go casting around for someone who knows how to get hospitals paid. They find literally in the basement of a big hospital in Boston, Massachusetts, a woman named Sue Henderson who's in her 50s, and who is the littlest picture person you ever met, who knows more about how to solve the game solve that the health insurers have created to get people paid than anybody on the planet. They essentially tried to code all of her knowledge into software, and they do, and this business becomes Athenahealth, which is a monster. They stayed up selling it for five billion dollars. But Sue Henderson was literally six levels down on the hospital organization chart, and she had the only person in the whole operation, who had the answers to the question that if the hospital doesn't answer, they go out of business. Even the hospital did not appreciate what they had or her knowledge. The episode is exploring this. He calls L6s all over the world. The people who have some critical understanding of a problem, and who have real trouble for odd reasons being heard. One other examples. [inaudible], when it gets to the White House, he has this career of looking for the person who knows the answer to the question buried in the organization. He gets there, right as Obamacare is cratering. I don't know if you remember, but they write that, the legislation gets passed and then the website crashed.

Chris Hill: The website, yeah.

Michael Lewis: It was the biggest public relations disaster in the Obama presidency. It was just like, how did that happen? They worked so hard to get this thing passed, and the website crashes. Todd goes in, chief technology officer, what the hell happened? He knows the secretary of the department's not going to know, the under secretary is not going to know. He just went right down to a contractor who is, again, I think he was seven levels down from the top, who actually had an answer to what was wrong with the software, and they fixed the software. But I think you're right. I think it's like, if I were running a big organization, thank God I'm not, I would be really alive to this problem. That a lot of what I need to know doesn't find its way to me, naturally.

There are all these barriers coming up the chain, before it gets to me. I need to find ways to open up those barriers. You can call it flattening the organization, whatever. But the truth is, especially in corporate America, the way we behave does not encourage this. Just with like pay. You've got CEOs being paid by $50 million a year. That is not a person who the L6 is going to feel comfortable dialing up and saying, I can fix your problem. The status differences are so great. I'll put it another way. The greater the status differences that you introduce in your organization between L1 and L6, the less likely the critical things that the L6 knows, is going to find its way to the L1. It's just going to be the status differences end up being barriers to understanding.

Chris Hill: More with Michael Lewis right after the break. So don't touch that dial. You're listening to Motley Fool Money. [MUSIC]

Welcome back to Motley Fool Money. I'm Chris Hill. My guest is Michael Lewis, author of such best selling books as Moneyball, Liar's Poker, and his latest, The Premonition. I know we don't have all the time in the world. I also know, as you've said, you're not an expert in all things related to finance, but I'm confident that you have opinions about some of the things that are in the financial world.

Michael Lewis: Often wrong, seldom in doubt, that's me. [laughs]

Chris Hill: When you see all of the headlines about cryptocurrency, about Bitcoin, about NFTs, you think what?

Michael Lewis: Where is the book? Where is my book in this? There's a book in this, I just don't know where it is yet. That's been my thought. I think I've found it. I'm not going to tell you what it is, but there is this whole phenomena, meme stocks, NFTs, cryptocurrencies. They're not all the same thing obviously, but they're all by-products of the gamification of finance. It's more and more like a board game and I don't have the Warren Buffett, Charlie Munger deep moral disapproval of it all. I think that people will learn our lessons [laughs] that there's plenty of information out there. Anybody who can be saved from themselves, can find the information to save them from, I don't know, buying GameStop at the high or buying Bitcoin that they can't afford to lose or buying one of those NFT apes. It's just you're playing in a market that is not underpinned by value or rather the value is assigned in a different way. The value is not some measurement of expected future earnings of an enterprise, the value is what is ever going to think about this tomorrow? It's like how is fashion going to change, it's that judgment you're making.

The cryptocurrencies in particular, really interest me because when I look at that, I think this is telling us something about the world we're living in and the trust problems that we have in our world. You could trace a lot of problems in this country to a decline in trust in inter-personal relationship between each other and the trust of the government.com, trust of institutions. Satoshi, when it creates Bitcoin, it's on the back end of the financial crisis or in the middle of the financial crisis. It's an expression of mistrust, mistrust of our government's currency, which is not a healthy thing, but an understandable thing and would interest me when I watch that world, how they moved from like a juvenile libertarian fantasy to try to create trust of their own and that's when I watch it, I'm watching it through that lens like who's trying to build trust in this world and how are they doing it? Because they are not going to sustain anything without the trust, people will need to trust that their Bitcoin won't be stolen or that there's a place they can put it and it will be safe and they won't forget their keys.

All that stuff has to be resolved if it's going to be a viable asset class. The other lens I look at it through is the social consequences of the asset class getting really big. Ten years ago, when it was a play thing and it was few tens-of-millions-of-dollars who cared, when all of a sudden, well, as a few months ago, the market value of all the cryptocurrencies was two trillion dollars. Well, the market value of the businesses around the cryptocurrencies was maybe another trillion dollars around the world. When you talked about a few trillion dollars. This is a different thing. You've created a really rich people with a lot of influence. You've created probably some systematic risks in that if all this goes poof and three-trillion-dollar vanishes, that's not going to just happen without anything else happening in the world, you create status of people like all of a sudden, people are top dogs in finance. They are there, they're not at Goldman Sachs, they're 50 people in crypto land who have 10 times more money than the guy who runs Goldman Sachs and the game on Wall Street, who has the most money? Wall Street just lost. The status thing gets really interesting to me. I look at it through that lens too.

Chris Hill: Last thing and then I'll let you go. You recently went back and revisited your first book, Liar's Poker. You narrated the audio book version of it. What was it like rereading a book that you wrote more than 30 years ago?

Michael Lewis: Well, I was bailed out by the quality of the material. I was learning how to write a book. It wasn't horrible, but it was just they're lots of moments that I found literarily embarrassing and I wondered in the hands of someone who really knew what they were doing instead of in the hands of someone who is just enthusiastic about a little great material, God, that could've been a masterpiece. I could see where I screwed up stuff and so that was my first thing. As I was reading I noticed, and in particular, it's hard to describe. But you find your voice on the page and you don't really think about it, you don't think, oh, that's my voice, but you develop a voice on the page. I hadn't done that when I started that book, that was really the first sustained piece of writing I'd ever done. I was learning to write a book by writing a book and Chapter 2, 3, 4, and 5. Chapter 1 I wrote at the end so that's not fair, but 2, 3, 4 and 5, I could see my voice getting clearer and clearer and I could see the influences starting to diminish. But I could hear George Orwell and Charles Dickens and Mark Twain and all these things I was reading at the time in my own prose, which is more to find. I was imitating other people and that's what you do when you're learning, you start by imitating other people, but ideally you do it before you write your first book and I just hadn't. I was getting that out of my system. [MUSIC]

Chris Hill: Season 3 of against the rules is available. Wherever you get your podcasts, it is eye-opening, it is great storytelling, which is not surprising because it's from Michael Lewis. Michael, really appreciate your time.

Michael Lewis: Thanks Hill and I hope to get out of that basement soon.

Chris Hill: Come on, how great is Michael Lewis? I could have talked with him for another hour. He is so curious and thoughtful and such a great storyteller, all of which is on display in his podcast. Apple Podcasts, Spotify, Stitcher, Amazon Music, Audible IR, whichever app you use to give your podcast, checkout against the rules and while you're on the app, give our show a follow, if you wouldn't mind. Be sure to check out David Gardner's weekly podcast, Rule Breaker Investing. Among the reasons to listen to these podcasts, they're free. You know what else is free? Our investing starter kit. It's a 20 page report that covers everything from saving money to 401Ks, to buying your first stock and it comes with a built-in watch list of 15 stocks and five ETFs and it's free.

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As always, people on the program may have interest in the stocks they talked about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's it for this week's Motley Fool Money radio show. This episode is mixed by the amazing Dan Boyd. I'm Chris Hill, thanks for listening. We'll see you next time.