Joseph Moore: How to Get Rich in American History: 300 Years of Financial Advice That Worked (& Didn’t) | #639
Dr. Joseph Moore discusses his book on 300 years of American financial history, arguing that historical financial advice varies dramatically by era due to changing fundamentals like currency stability and inflation. He emphasizes that real estate builds modest fortunes rather than great wealth, stocks didn't always beat bonds historically, and the best path to riches involves solving other people's problems rather than optimizing personal consumption.
Summary
Dr. Joseph Moore, a historian who spent a decade researching American financial advice, explains how financial fundamentals have shifted dramatically across centuries, making direct historical comparisons problematic. He contrasts the 1800s when Americans were advised never to save money (due to unstable private currencies that could become worthless) with the modern era where currency stability is assumed. Moore details how self-issued currencies by banks and individuals created dangerous conditions for savers, particularly immigrants, until the greenback dollar provided stability after the Civil War.
Moore challenges the modern investment narrative that stocks always beat bonds long-term, providing historical data showing bonds outperformed stocks during the 19th century and that they performed similarly for extended periods even into recent decades. He explains that the "stocks always win" advice emerged in the 1910s as a desperate response to new inflation and income taxes that suddenly broke a 100-year period of price stability. This demonstrates how investment advice is context-dependent on the economic regime.
Regarding real estate, Moore argues it's an excellent tool for building modest fortunes through leverage (borrowing 95 cents on the dollar), but not the path to great wealth as evidenced by the Forbes 500 being dominated by business founders, not real estate investors. He shares his personal experience buying rental properties starting in 2013-15, including harrowing incidents with dangerous tenants, but eventually building wealth through treating real estate as an active business rather than a passive investment. Critically, he notes that residential real estate inflation-adjusted costs remained flat from 1890 to 1990 in most American cities, contradicting the modern assumption that real estate always appreciates.
Moore discusses his attempts to beat the market, including a three-month period trading based on Jim Cramer's stock picks, which technically worked but cost him time with his family (he missed his daughter's first steps). He argues that even successful market-beating rarely justifies the time investment when measured against hourly opportunity costs, and that most people should focus on beating inflation and taxes rather than beating a benchmark index.
The book outlines five core principles for wealth building: solving other people's problems (not optimizing your own finances), taking more risks in a historically safe era, relocating to chase opportunity (one in three Americans used to move annually versus one in 13 today), marrying well, and maintaining optimism. Moore created his own cryptocurrency (Billionarily) with 1.1 billion coins to illustrate how meaningless net worth measurements can be, briefly showing a $1 billion portfolio value from a $100 investment.
Moore highlights a fundamental shift in stock market mechanics: from the George Washington era through the 1980s, dividends comprised 96% of stock returns, whereas today they're nearly absent (currently around 1% on the S&P 500). He notes that most retail and even professional investors misunderstand dividends, incorrectly thinking they're free money that doesn't reduce stock price, when dividends are actually paid from company value. He also emphasizes the importance of understanding how the stock market itself has transformed through history (Ship of Theseus problem), particularly with the passive investing revolution fundamentally changing market dynamics.
About this episode
My guest today is Joseph Moore, a historian and former professor who spent over a decade in the archives studying 300 years of American financial advice, which he explains in his new book, How to Get Rich in American History: 300 Years of Financial Advice That Worked (& Didn’t). In today’s episode, Joseph explains what 300 years of American financial advice reveals about getting rich. He shares why real estate barely appreciated for a century, why bonds beat stocks for decades, and how modern investing advice was born chasing inflation and taxes. To close, Joseph reveals the five timeless principles that built wealth in every era. (0:00) Starts (1:34) Joseph Moore shares a historical perspective on money (13:04) Real estate investment strategies (20:59) Stocks vs. bonds debate (25:45) Should you try to beat the market? (33:32) Key financial lessons from history (39:54) Joseph's most memorable investments (42:10) Surprising historical financial statistics ----- Follow Meb on X, LinkedIn and YouTube For detailed show notes, click here To learn more about our funds and follow us, subscribe to our mailing list or visit us at cambriainvestments.com ----- Follow The Idea Farm: X | LinkedIn | Instagram | TikTok ----- Interested in sponsoring the show? Email us at [email protected] ----- Past guests include Ed Thorp, Richard Thaler, Jeremy Grantham, Joel Greenblatt, Campbell Harvey, Ivy Zelman, Kathryn Kaminski, Jason Calacanis, Whitney Baker, Aswath Damodaran, Howard Marks, Tom Barton, and many more. ----- Meb's invested in some awesome startups that have passed along discounts to our listeners. Check them out here! ----- Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Learn more about your ad choices. Visit megaphone.fm/adchoices
Key Insights
- Moore argues that self-issued private currencies in 1800s America were extremely dangerous because they could become worthless overnight when issuers fled or failed, making people desperate to convert cash into tangible assets like real estate to preserve value.
- The conventional wisdom that stocks always beat bonds long-term is historically false; bonds outperformed stocks throughout the 19th century and performed equally well as stocks for extended 40-70 year periods even in modern times.
- The modern investment advice to buy stocks for the long run only emerged in the 1910s as a panic response to sudden inflation and new income taxes that broke a 100-year period of price stability, making all previous investment strategies obsolete.
- Real estate in America did not appreciate in inflation-adjusted terms from 1890 to 1990 in most major cities, contradicting modern assumptions, though it was still valuable because it allowed people to leverage borrowed money and lock in value during inflationary periods.
- The Forbes 500 list shows that great fortunes are built through business creation and solving problems, not real estate, despite real estate being the primary wealth-building tool for everyday Americans seeking modest fortunes.
- Stock market mechanics have fundamentally changed over history: dividends accounted for 96% of returns from the Washington era through the 1980s, but now comprise only about 1% of S&P 500 returns, meaning the market functions as a completely different instrument.
- Moore's personal experiment trying to beat the market by trading Jim Cramer recommendations technically worked but caused him to miss his daughter's first steps, illustrating that even successful market-beating rarely justifies the time cost when measured against hourly opportunity costs.
- Most retail investors and a significant percentage of professional investors incorrectly believe dividends are free money that don't reduce stock price, when dividends are actually paid from company value and must be reinvested rather than spent to generate historical 8-10% returns.
Topics
Transcript
In the book, I quote a grandfather sitting his grandson down and saying, now I want you to understand, grandson, never save money. Like, get it out of your hands as fast as you can. Real estate did not always go up. A residential home in Pittsburgh, in Atlanta, in Houston, in most American cities cost the same inflation adjusted in the 1990s as it had in the 1890s. Human traffickers moved into the house. We had hoarders with rats in one of the apartments the hoarders pulled a shotgun on me i had to leap out off the deck to try to run to my my car to get away it was like oh my gosh we have this…
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